TN Senate unfairly targets consumer legal funding

Dan Cleary

Dan Cleary

Last month, with little fanfare and even less public debate, the Tennessee Senate voted to shut down an industry and service that has successfully served Tennesseans without incident for over 13 years.

The legislation would implement suffocating price controls onto my business of consumer legal funding. Not only will my small business be forced to shut its doors if this bill is enacted, my employees will lose their jobs, and the people of Tennessee will lose access to an important funding source.

As the founder of a Nashville-based consumer legal funding company, I want to help policymakers understand exactly what our product is, whom it was created to help, and why Tennesseans should care.

Consumer legal funding is designed to serve citizens who find themselves in a difficult economic situation due to a pending legal claim. These consumers need access to funds to pay for essential daily expenses such as rent, transportation, utilities and food while their legal claims are being settled. Our consumer agreements are non-recourse, meaning that unless there is a settlement, the consumer has no obligation for repayment.

Our industry serves people like Sharon, an emergency responder from Lebanon, Tenn. She suffered significant injuries in an automobile accident that required three surgeries and left her unable to earn any household income while her insurance claim was being adjudicated or settled.

As medical bills piled up and everyday expenses became a financial burden, Sharon needed help. She sought out consumer legal funding, and by securing just a few thousand dollars, Sharon was able to pay down mounting bills and make ends meet while waiting for her claim to be heard.

So, why among its first items of business in 2014, would the Tennessee Senate abruptly schedule a vote on legislation to put our industry out of business? And even more perplexing, why is the Tennessee Chamber of Commerce, an organization that is normally an advocate of free enterprise, leading such a charge at the statehouse?

The answer is simple. It all leads back to pressure being applied from the Washington, D.C.-based U.S. Chamber of Commerce and the billion-dollar national insurance company interests who are calling the shots from outside the Volunteer State.

Insurance corporations use a consumer’s accident and lack of financial security to force less-than-market-rate settlements. Relying on millions of data points as to the valuation of an injury, insurers have no incentive to settle quickly, except for well below established injury values. Consumer legal funding bridges the financial gap from the time an accident occurs until a consumer has a chance to fairly settle his injury claim. Our product gives consumers the strength to hang on in court proceedings or settlement negotiations despite having limited bargaining power against large insurance interests.

While we all hope a citizen never finds himself injured or in the financial constraints that require consumer legal funding, the truth is, it happens. As for the fate of future individuals who may be injured in accidents through no fault of their own, there’s still time for Tennessee legislators to listen to local voices and send a clear message to the deep-pocketed, out-of-state interests to take their industry-killing plans elsewhere.

Dan Cleary is the founder of Provident Litigation Funding Inc., a Nashville-based consumer legal funding company.

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