The New York Legislature has recently passed a bill aimed at regulating the lawsuit lending industry. If New York Governor Kathy Hochul signs the bill into law, it would establish a 25 percent cap on the gross recovery a financing company can earn from a lawsuit. In doing so, New York would align itself with states like Montana, Indiana, Louisiana, West Virginia, and Arkansas, which have already implemented similar interest rate caps.
Proponents of the legislation argue that such a measure is necessary to offer protection to plaintiffs, who might be subjected to exorbitant interest rates on advances against potential lawsuit wins. While the state’s intention is to standardize practice in this domain, opponents suggest that the cap could limit the availability of such lending options, potentially affecting plaintiffs’ ability to finance their legal pursuits.