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Publication Date

2015

Abstract

This Note discusses the value of alternative litigation funding (ALF) and the legal challenges affecting the ALF industry in Georgia. More specifically, it identifies a way to maximize ALF's benefits for plaintiffs with personal tort and employment discrimination claims. Tort victims who are rendered incapable of working, and employees who have lost jobs because of workplace discrimination or retaliation,face immediate financial burdens-they may be unable to afford food, housing, health care, transportation, and other necessities. This economic pressure often forces plaintiffs to settle quickly for less than the value of the harm inflicted. But ALF companies offer a workable solution to this problem by providing financial backing to plaintiffs in exchange for a stake in any eventual recovery. This support gives plaintiffs the economic stability to adequately pursue their claims. However, Georgia inhibits ALF through the doctrine of champerty and prohibitions on the assignability of legal claims. ALF companies are barred from contracting for a share of plaintiffs' potential recovery. Consequently, ALF contracts in Georgia are only enforceable when they are structured in ways that more closely resemble high interest loans. These fee arrangements are complex and inefficient; they involve unrestricted interest charges and, in short, provide more opportunities for abuse of consumer borrowers. To resolve these problems and facilitate socially useful development of ALF, the Note recommends that Georgia (1) ban interest bearing lawsuit loans, (2) repeal the law against champerty, and (3) legalize assignment of proceeds from lawsuits for personal torts and employment discrimination.

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