A group of five lawyers told the New York Times that federal prosecutors are investigating the “fast-growing” lawsuit lending industry.
The lawyers said Manhattan federal prosecutors sent subpoenas to lawsuit lending firms to examine possible relationships between these firms and plaintiffs’ lawyers who refer clients. The article says that “formal financial arrangements” between the firms and plaintiffs’ lawyers could be considered illegal kickbacks.
Lawsuit lending has garnered significant media attention in New York, particularly for the sky-high interest rates associated with these loans. A New York Post story from January found some lawsuit loans in New York came with interest rates as high as 124 percent.