Wisconsin’s legislature is considering a proposal that would create some basic protections for consumers who choose to finance the cost of their lawsuits.

Lawsuit lending is a type of financing provided to the plaintiff with the repayment of the loan carved out of the proceeds of the lawsuit.

The lawsuit loan often has very high interest rates, which results in a plaintiff being left with very little financial recovery from a successful lawsuit.

In addition, the presence of a lawsuit loan often needlessly prolongs the litigation, increasing the cost of the civil justice system for both plaintiff and defendant.

Senate Bill 842 introduced by Senator Eric Wimberger (Green Bay), and Assembly Bill 858, introduced by Representative Ron Tusler (Appleton), would place some limits on the practice of consumer lawsuit lending, including a cap of the interest rate at no more than 18 percent.

In addition, the bill would cap the fees a lender may charge for the loan, limit the term of the loan to a maximum of three years, and allow the consumer to rescind the transaction.  Importantly, the legislation would also prohibit the lender from any involvement in the legal dispute.

Representative Tip McGuire (Somers) a leading supporter of the legislation said, “Predatory lawsuit lending can unnecessarily prolong litigation and leave plaintiffs in a far worse position financially even if they win.”

Senate Bill 842 has been referred to the Senate Committee on Judiciary and Public Safety.

Assembly Bill 858 is being reviewed by the Committee on Consumer Protection.

NFIB supports passage of this legislation, and the Wisconsin Civil Justice Council has made passage a top priority.