The glossy brochures are irresistible. “The Power of Attorney Funding,” proclaims the one from Counsel Financial Services, against a backdrop of a courthouse facade and an American flag. “We do what banks won’t,” reassures LawFinance Group Holdings, superimposing its pitch on the reassuring heft of a courthouse pillar. “We have what it takes to win.”
What it takes, according to companies such as Counsel Financial, LawFinance Group and their dozen or so competitors, is money. These businesses are in a fast-growing sector that makes subprime loans to plaintiffs lawyers. The legal world’s equivalent of home equity lenders, they make loans against a firm’s caseload or against a trial verdict on appeal — and they typically charge double-digit interest rates (or double-digit percentages of the attorney’s contingency fees). “We advance cash against assets that are hard to get at,” says Gary Chodes, the CEO of Oasis Legal Finance Group, a three-year-old company backed by a hedge fund that Chodes declines to name. Chodes says Oasis charges “north of 20 percent” interest, based on its risk and the length of the loan. “We’re priced closer to venture capital than a bank loan.”
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