Denver Lawsuit to Determine Whether Legal Finance Firms Must Register as Lenders
Gary Chodes considers himself an investor. However, it is a bit difficult to determine as to what he is investing in.
Chodes, who established the Chicago-based firm called Oasis Legal Finance, advances money to plaintiffs in lawsuits and is often perceived as using the courts just like a venture capital market. When the lawsuits culminate in a lucrative settlement or jury award, Chodes then takes his money back plus interest. But, when the plaintiffs lose, Chodes gets nothing.
The manner he described his endeavor, Chodes is investing in justice.
In an interview, Chodes said, “We provide a service that helps consumers get a level playing field.”
However, not everyone perceives it that way.
The industry where Chodes belongs to is known as the legal finance business. At present, it is thriving throughout the country, except in the state of Colorado where the industry is not operating.
Nevertheless, the result of a lawsuit that is now entering the final stages in a Denver District Court can potentially change that, bringing back the legal finance industry to Colorado, along with the deliberation that goes with it.
Bryan Quigley, spokesman for the Institute for Legal Reform of the U.S. Chamber of Commerce, said, “It skews the whole decision-making process in lawsuits about the value of cases, when to settle a case.”
The legal finance industry left Colorado early last year when the office of the state AG declared that firms engaging in such services should first register as lenders and follow state regulations for such types of companies. The businesses filed a lawsuit against the state, asking the court for a declaratory judgment that they are not lenders. The state countersued claiming that the companies violated lending laws. The case is still ongoing and is already set for trial this spring.