So you’re hurt and out-of-work through no fault of your own. You hired a good injury lawyer to bring a claim against the responsible parties. You lawyer says you’ve got a strong case, but meanwhile you’ve got no money coming in and those bills keep piling up. So what do you do? Hey, you’ve got an idea — your lawyer can front you some money against that future settlement you’ll eventually get!
Only one problem: He can’t. The New York State Bar ethical rules just won’t allow it. If he does, and he gets caught, he can lose his license to practice law. Not long ago, a big injury law firm, with a huge advertizing presence, out of Western New York State had one if its two senior partners suspended from the practice of law because he was involved in lending money to his injured clients.
Why is it considered wrong for your injury lawyer to lend you money? The problem is that when your lawyer becomes your lender, a conflict of interest arises. Your lawyer is supposed zealously represent you in your claim for compensation without being derailed by self-interest concerns. But if you owe him money, his self interest might interfere with his doing what is right for you. For example, if he wants to make sure he gets repaid, he might be tempted to talk you into settling your case for less than it is really worth to avoid the risk of losing at trial and not getting repaid.
So how do you get a loan to pay those bills while you wait for your case to be resolved? Your lawyer should be able to refer you to lending companies who specialize in lending money to injured claimants. These lenders will use your case as “collateral” – when your case is resolved, they will take their money back — with hefty interest – before you touch a dime. The interest is usually substantial, so we always tell our clients to try to borrow from friends or relatives first, or try to get a traditional loan, before resorting to lawsuit lenders. They are a last resort, but sometimes they are the only thing standing between our injured clients and financial disaster.