The president of the Alliance for Responsible Consumer Legal Funding has argued that consumer protection and access to legal funding are not competing goals, pointing to near-identical safeguards enacted in states at opposite ends of the political spectrum.

Writing in the National Law Review, Eric Schuller compares the frameworks adopted in Kansas, Utah, California and New York and finds the same core provisions recurring regardless of which party controls the legislature. The starting point is the product itself: consumer legal funding is non-recourse, so repayment depends solely on the proceeds of the claim and a consumer who recovers nothing owes nothing.

From there, the statutes converge on disclosure. Kansas HB 2518 requires agreements to use "common, everyday language" and to state all charges and the maximum amount the consumer could owe; New York requires "common, understandable language" alongside a repayment schedule. Cancellation rights follow a similar pattern, with Kansas and New York providing ten business days, Utah HB 280 extending its window from five days to ten, and California allowing five business days to rescind.

Each state also builds in the claimant's attorney. Kansas requires an attorney acknowledgment confirming the disclosures were reviewed and that no referral fee was paid, without which the contract is null and void. All four bar funding companies from influencing the conduct, settlement or resolution of the claim, leaving those decisions with the consumer and counsel.

On enforcement, Kansas permits penalties of up to $10,000 per willful violation, California provides statutory damages and attorney's fees, and New York allows a company to forfeit its right to recovery.

A New York Times investigation published Wednesday reports that some of the largest consumer legal funding companies are bundling cash advances made to personal injury plaintiffs into asset-backed securities sold to investors, and examines how that financing cycle interacts with a sharp rise in personal injury litigation.

As reported by The New York Times, reporters Ellen Gabler, Robert Gebeloff and Julie Tate identified six major funders that securitize their advances, accounting for more than 90% of advances nationwide according to industry trade group figures. The Times found more than two dozen securitization deals since 2020, representing hundreds of thousands of cases and raising $2.8 billion from investors. Advances carry fees and interest averaging 35% to 45% a year, and in one cited example a New York plaintiff who received $76,500 in advances owed at least $1.4 million by the time her case settled.

The article situates this alongside a 70% increase in personal injury filings in state courts over the past decade, and notes that since 2023 companies including Geico, Allstate, Uber and FedEx have brought at least 60 civil racketeering suits accusing lawyers and medical providers of inflating claims. Funders quoted in the piece dispute that fraud is widespread, with the American Legal Finance Association's Jack Kelly arguing that cutting off securitization would cut off the supply of money to victims. The Times also reports that more than a dozen states have restricted third-party litigation funding, with West Virginia the first to explicitly limit securitization.

The Alliance for Responsible Consumer Legal Funding responded to the report by calling for regulation rather than restriction.

"Some of the conduct described in The New York Times article is exactly the type of conduct responsible regulation should prevent," said Eric Schuller, President of the Alliance for Responsible Consumer Legal Funding. "New York has now put strong protections in place that directly address many of these concerns, while states such as Kansas have adopted similarly comprehensive regulatory frameworks. The answer is not to take Consumer Legal Funding away from injured consumers who need help paying their rent, mortgage, utilities or putting food on the table while their case moves through the legal system. The answer is to establish clear rules, enforce those rules and hold anyone who violates them accountable. Responsible regulation protects consumers while preserving access to Consumer Legal Funding for the people who truly need it."