I-Team Investigates: Litigation Financing
Legal finance companies say they provide an important service by advancing money to people who need it, however, some customers say all they did was borrow trouble.
Four years ago, Linda Pope and her friend, Sondra Summers, were in a car crash. Their SUV was crushed and they had to undergo numerous surgeries to fix their broken necks. Pope says she was unable to work after the crash and borrowed $5,000 from Cambridge Management Group of Hackensack while her case went to court. The company advances money to people involved in lawsuits. Borrowers are expected to pay the company back after a settlement is reached. However, the company says borrowers owe nothing if they don?t win the lawsuit.
Pope says she regrets ever contacting Cambridge. She says she was unaware there was no limit on finance charges. She says a $5,000 loan will now cost her $66,000 to back pay. Summers says she got a $3,000 loan, which will cost her $35,000.
In a written statement, Cambridge says Pope and Summers signed their contracts voluntarily.
?It is nothing short of unethical,? Cambridge said in a statement. ?That these two clients have conspired to use a television show to seek a reduction of their contract, rather than contacting Cambridge [directly].?
In 2004, a year after the women signed their contracts, New York?s former attorney general Eliot Spitzer worked out a settlement with Cambridge. The company agreed to provide clients full disclosure, including spelling out repayment costs.
As News 12 New Jersey?s I-Team was preparing this report, Cambridge made an offer to Pope. The company now says instead of $66,000, it will take $45,000. Pope has not decided whether to accept the offer.
Related Information: Settlement between NY Attorney General's office and litigation finance industry American Legal Finance Association The Association of Trial Lawyers of America (NJ Chapter)