Updated

Updated · The New York Times · Aug 19

Wall Street Bundles Lawsuit Advances Into Securities Charging Plaintiffs 35% to 45%

Updated

Updated · The New York Times · Aug 19

Wall Street Bundles Lawsuit Advances Into Securities Charging Plaintiffs 35% to 45%

1 articles · Updated · The New York Times · Aug 19

Wall Street firms are packaging thousands of cash advances to personal-injury plaintiffs into asset-backed securities, letting investors buy claims on future lawsuit payouts.
Those advances help plaintiffs cover rent, food and medical bills while cases drag on, but most are repaid when insurers settle cases, often with annual fees and interest of 35% to 45%.
Court records cited by the Times show how costs can balloon: a New York woman who received $76,500 in advances owed at least $1.4 million by the time her case settled.
For funders, securitization turns old advances into immediate cash for new lending; for investors, it creates a stream of payments tied to lawsuit resolutions, extending asset-backed finance into another niche market.

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How does turning a personal injury settlement into a Wall Street tradable asset change the fundamental nature of the justice system?

Could the mounting pressure of compounding lawsuit advances force vulnerable plaintiffs to accept lower settlements just to escape their debt?

Will new state regulations capping legal funding returns crush Wall Street's lucrative new asset class before it fully matures?

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