Legal Settlement Cash Advances Aren't Loans: Ga. Justices

Law360 (October 22, 2018, 5:34 PM EDT) -- The Georgia Supreme Court handed a win to the consumer legal funding industry Monday in finding that legal case "investments" are not loans and are therefore outside the scope of state usury laws.

In a unanimous decision in favor of Atlanta-based Cherokee Funding LLC, the court backed an appeals court conclusion that Cherokee's cash advances to clients expecting settlements in personal injury cases aren't covered by the state Payday Lending Act and the Industrial Loan Act. Both statutes carry strict limits on lender returns.

While acknowledging some ambiguity in the definition of a "loan" under the laws, the court drew a...

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