Georgia Rules on Litigation Funding Agreements

The Georgia Supreme Court recently ruled in Ruth v. Cherokee Funding, LLC, that funding provided to plaintiffs during a pending lawsuit is not a loan under Georgia law.  The court reasoned that since the funders did not expect repayment if the plaintiffs lost their lawsuits, the agreements were not loans under Georgia’s Payday Lending Act or the Industrial Loan Act.   This decision was a win for the litigation funding industry.  In an article in Legal News Line, executive director of the American Legal Finance Association was quoted as saying: “The American Legal Finance Association (ALFA) applauds the Georgia Supreme Court’s decision today recognizing the fundamental differences between pre-settlement advances and loans.”