A personal injury plaintiff has filed a lawsuit against a lawyer and a consumer legal fund, alleging that he was asked to foot the bill for litigation funding he had not consented to. The case involves Sean Murtaugh, who was entailed with an employment lawsuit after sustaining injuries in a 2018 workplace incident.
Murtaugh received financial support from Jordan Litigation Funding for his case against his employer. Upon settling the case for $475,000, Murtaugh claims he was charged by his attorney, Robert Goggin, for interest on separate funding Goggin had obtained from Jordan. This funding was reportedly used to cover expert costs, medical bills, and depositions.
According to the complaint filed in federal district court, “Mr. Murtaugh had no idea that Mr. Goggin had received litigation funding to cover case costs, and Mr. Murtaugh never agreed to pay interest on any of those case costs.”
Murtaugh claims to have received an itemized cost showing Goggin had borrowed over $81,000 for legal costs that accrued daily interest, leading to a total sum of nearly $137,000. Though Murtaugh admits to receiving six months of financial aid from Jordan to cover personal expenses during his time away from work, he firmly states that he did not consent to funding for his lawsuit.
The case sheds light on the distinction between consumer legal funding and litigation finance. The former pertains to funds provided to plaintiffs for personal expenses while their claims are pending. These payments emerge from any awarded settlement. Litigation finance, on the other hand, involves investors offering a considerable amount to law firms or claimants to cover litigation costs, in return for a portion of the settlement.
The case currently unfolds in Pennsylvania, a state without specific legislation barring consumer legal funding from being used for litigation costs. Several states, including Maine, Oklahoma, and Vermont, have already enacted regulations for consumer legal funding.
Eric Schuller, president of the Alliance for Responsible Consumer Legal Funding, emphasized on the need for industry regulation, arguing that rules can ensure consumers and attorneys fully understand their roles and the funding’s intended application. “This is a good example of why proper regulation on the industry is needed,” Schuller said.
For additional details, you can view the original article on Bloomberg Law.