A report by the Perryman Group estimates that third-party litigation funding costs New York $420 million in annual gross product, $73 million in lost tax revenue, and 3,600 jobs. Critics, including the Lawsuit Reform Alliance, argue for stricter regulation, such as interest caps and disclosure requirements, to curb financial impacts and prevent fraud.
Proponents of consumer litigation funding, like the American Legal Finance Association (ALFA), emphasize its benefits for personal injury plaintiffs covering essential needs. While ALFA questions the report’s methodology, it supports transparency legislation and a 36% interest cap, higher than other lending limits.
Debate continues over balancing reform with accessibility. Advocates warn unchecked practices could foster fraud, while skeptics question if proposed changes would significantly boost employment or improve the system.
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