NEW YORK (Legal Newsline) – Companies that fund lawsuits can find themselves in the crosshairs of state regulators, and a recent New York Post article revealed that one such business has given tens of thousands of dollars to one of the nation’s most important public officials – who happens to have sued a competing company.
The article details the financial support given by LawCash, a company that offers funding to plaintiffs attorneys and their clients, to New York Attorney General Eric Schneiderman, and a review of campaign contributions shows LawCash has a nationwide interest in politics.
The two LawCash executives who are the subject of the article have combined to give at least $215,000 to candidates around the country.
Some state officials in charge of enforcing state usury laws have targeted the litigation financing industry because, by the time a plaintiff recovers, the amount paid to the funder can be of an interest rate well in excess of what is allowed if the agreement is considered a loan.
But companies like LawCash say the agreement is not a loan because they recover nothing if the plaintiff recovers nothing.
One such legal action involves Schneiderman’s lawsuit against RD Legal Funding, which is accused of scamming first responders to the Sept. 11, 2001, terrorist attacks by offering high-priced advance proposals on pending settlements.
Also, RD Legal Funding is accused of targeting former NFL players suffering from neuro-degenerative diseases who are entitled to payments from a class action settlement in Philadelphia federal court.
These agreements cheated RD Legal’s clients because they charged them up to 250 percent interest rates, allegedly.
To sue RD Legal Funding, the former regime in charge of the federal Consumer Financial Protection Bureau teamed with Schneiderman. The federal agency needed Schneiderman as a plaintiff in order to file claims that RD Legal violated New York usury laws.
The New York Post article says LawCash has been “showering” Schneiderman during his time as AG with campaign contributions, part of a trend that has given $145,000 to politicians around the country.
In fact, LawCash President Harvey Hirschfeld and CEO Dennis Shields have given $39,000 to Schneiderman’s campaign fund since 2011.
Hirschfeld also recently sent a few bucks to one of Schneiderman’s colleagues in a neighboring state, Pennsylvania Attorney General Josh Shapiro.
Shapiro has a similar focus on the financial services industry, having created a state version of the CFPB – Pennsylvania’s Consumer Financial Protection Unit, which has a former member of the CFPB running it.
Shapiro’s lawsuit against student loan servicer Navient is a “copycat” of one filed earlier by the CFPB, the company is alleging. Shapiro alleges the company added up to $4 billion in interest charges in a five-year period by misleading borrowers.
Records show LawCash’s Hirschfeld donated $2,700 to Shapiro’s 2016 campaign.
But a state appeals court decision that was issued a month before Shapiro’s election serves to warn companies like LawCash from doing business in the state. It doesn’t appear the ruling was appealed to the state Supreme Court.
Other officials of note who have received contributions from Hirschfeld and Shields include:
-New York Gov. Andrew Cuomo, who received $5,000 from Hirschfeld in 2010;
-New Jersey Gov. Chris Christie, who received $3,800 from Hirschfeld in 2013;
-Texas Gov. Greg Abbott, who was previously the state’s attorney general, has received more than $16,000 from Hirschfeld since 2006;
-Former U.S. Sen. Mary Landrieu of Louisiana, who received $2,600 each from Hirschfeld and Shields in 2014; and
-U.S. Sen Bill Nelson of Florida, who received $1,000 from Shields in 2012.