Litigation funder gave $100K to plaintiff, expects $2 million back; Client allegedly not paying up
A new lawsuit in New York shows what happens when a litigation funder’s client hits a jackpot and also what happens when he decides not to pay. LawCash sued Jinsoo Nho and the Law Offices of Choi & Park on June 23, seeking payment of $2 million from Nho’s nearly $7 million settlement.
Litigation funders provide cash to plaintiffs while their lawsuits are pending in exchange for a portion of whatever is recovered. While the interest on Nho’s agreement would ordinarily violate usury laws, litigation funders argue their agreements are not traditional loans and therefore not subject to those laws. They argue this because if the plaintiff recovers nothing, the funder also recovers nothing.
LawCash had only to provide $100,000 under the agreement with Nho, who was pursuing an automobile accident lawsuit at the time. In 2011, Nho repaid half of it. LawCash was first unaware that the litigation settled for $6.9 million. It says a $2 million check it ultimately received from lawyer Yohan Choi was no good.
“Choi informed LawCash for the first time that although he had received proceeds from the underlying settlement that were subject to the funding agreement, he had distributed those proceeds to defendant Nho, instead of to LawCash as he was obligated to do,” the lawsuit says.
“He also acknowledged that money was not available to cover the check he had presented to LawCash.”
Legal finance companies have found success in courts recently when their clients ended up challenging how much they had to pay. The industry has fended off class actions in several states.
Topics: Litigation Funding, Loans, Settlement
Work cited: John O’Brien, Legal Newsline, June 30, 2020
