News release from Alliance for Responsible Consumer Legal Funding
Northbrook, Illinois -Oasis Legal Finance, a member of ARC, announced today it will became the first of what is expected to be a mass exodus of companies from the state of Tennessee following the enactment of legislation that places unprecedented price controls and other anti-business measures on a product relied upon primarily by citizens recovering from injuries in auto accidents and in need of temporary financial assistance.
Oasis Legal Finance, based in the Chicago area, is one of the nation’s largest and most respected providers of consumer legal funding services. They announced they will exit the Tennessee market effective July 1, 2014 as a result SB-1360, which Governor Bill Haslam signed on April 29.
(Note: The bill was hotly debated in the House. See previous post at the time HERE)
“We weren’t bluffing. We told lawmakers the industry would have no choice but to cease service to Tennessee consumers, which is exactly what we are doing,”said Oasis CEO Ralph Shayne. “It is lose-lose in Tennessee. Consumers will lose access to funding. Funding company employees will lose their jobs. The only winner is a billion-dollar insurance industry that now has even greater leverage over injured Tennessee citizens seeking fair settlements.”
Shayne explained that consumer legal funding is a product that helps consumers injured in an accident, who have both a pending legal claim and are represented by an attorney, by providing them debt-free, non-recourse financial assistance to help them make ends meet while they wait for a fair settlement to be reached in their case. These needs usually arise when a consumer has unexpectedly been in an automobile accident, usually through no fault of their own, that leaves them out of work, with limited financial resources to pay bills or put food on the table, all while awaiting their legal claim to be heard.
Harvey Hirschfeld, Chairman of the American Legal Finance Association and President of LawCash, added, “The enactment of this industry killing bill means the end to the consumer legal funding industry in Tennessee. As many of our members who operate businesses in Tennessee have indicated to us, they have begun the process of notifying consumers and employees that they will be winding down their Tennessee operations at the beginning of this summer.”
Dan Cleary, operator of a Nashville based legal funding company Provident Litigation Funding, Inc., stated, “I am an entrepreneur who has successfully served Tennesseans without incident for 13 years. I am shocked and appalled by the success out of state insurance companies achieved by using the Tennessee legislature to bully my locally built company.”
The bill, which instituted price controls on the amount a private business could charge for its services, was fought by a bipartisan group of legislators in the Tennessee House of Representatives before the legislation was narrowly approved on April 3. According to consumer legal funding industry sources, the Tennessee law’s price control provisions, would effectively force the industry to operate at a loss.
In addition to the price control provisions within SB-1360, the bill also included two other provisions designed to drive the industry from the State:
•An anti – assignment provision prohibiting a consumer legal funding company from putting receivables on their bank lines starting on the bill’s effective date of July 1, 2014.
•A provision on liens which states ANY lien must be satisfied before a consumer legal funding company is to receive funds -no matter who holds the lien or when the consumer grants the lien.
“Using the legislative process to favor one business at the expense of another should send a chill up the spine of any American who believes in free markets and free enterprise. It is especially deplorable when the outcome of this process hurts consumers,”concluded Shayne.
Alliance for Responsible Consumer Legal Funding
ARC members support the strong but sensible regulation of the consumer legal funding industry. Members serve as a lifeline to consumers as they wait for the fair resolution of their cases by providing them with funds to enable them to pay daily living expenses such as rent and mortgage payments, put gas in their cars and food on the table, and buy essential school supplies for their children.