Posted Apr 05, 2012 06:27 pm CDT
Nixing a New York law firm’s apparent effort to reduce what it contractually owed a litigation funding company, a state-court judge has ruled that the 40 percent interest rate charged by Quick Cash on total advances of $1.2 million didn’t violate usury law.
Although New York criminal law restricts interest on loans to 25 percent, the money given by Quick Cash Inc. to lawyers at the Long Island-based Kelly Grossman & Flanagan wasn’t actually a loan, Suffolk Supreme Court Justice Emily Pines held. Because the money only had to be repaid out of litigation proceeds, it was a non-recourse advance not subject to the usury law, Reuters reports.
“The court finds that the language in the contracts was not ambiguous, and the intent of the parties is clear, as demonstrated by the plaintiffs’ express acknowledgment, as sophisticated attorneys, in each contract that a non-recourse agreement for a cash advance was entered into and not a loan,” Pines wrote in her March 29 opinion.
The law firm did not return phone calls from the news agency seeking comment.