Critics compared the legal-financing industry to mob loan-sharking and modern-day slavery during a hearing Wednesday into the controversial practice of paying plaintiffs cash in advance against potential lawsuit settlements.
Lev Ginsburg of the state Business Council likened interest charges on the advance payments to the “vig” on money borrowed from mobsters, and said some people were left “with little or no money” from their settlements after paying rates as high as 200 percent.
“If Tony Soprano would go to prison for that, it’s too high,” Ginsburg told a meeting of the state Senate Consumer Protection Committee in Albany.
State Sen. Marisol Alcantara, a committee member, blasted testimony from Cardozo Law School professor Anthony Sebok, who cited six court rulings that exempted settlement advances from being regulated as loans.
“Slavery was once legal but it was wrong,” Alcantara fumed.
Kelly Gilroy of the American Legal Finance Association, an industry group, insisted that finance firms “level the playing field” and help plaintiffs who “are being sweated out by people on the other side.”
The hearing followed a Post expose that revealed how cash advances cost taxpayers millions of dollars a year by fueling questionable suits against the city.