Does non-recourse Legal Funding violate usury laws?
No. By providing legal funding against a pending case (more formally known as “non-recourse” Legal Finance) based on the future value of a case that may or may not ultimately be settled, ALFA Members share the risk of recovery and/or loss together with the plaintiff and the attorney. In fact, courts throughout the United States have held that such “at risk” payments are not loans. Legal funding is “non-recourse”, which means that the funding does not have to be repaid if the plaintiff does not prevail in their case. The fact that legal funding is “non-recourse” distinguishes it from a loan.
