Litigation Funding for Injured Man Usurious, 6th Cir. Affirms

A Kentucky man who was injured when a gas can exploded doesn’t owe litigation funder Prospect Funding Holdings LLC $1.5 million or more in interest on four loans, the Sixth Circuit ruled April 25.

The loan agreements for Christopher Boling’s underlying product liability case violate Kentucky laws against usury, a panel of the U.S. Court of Appeals for the Sixth Circuit said in an unpublished opinion. And they violate a Kentucky statute banning a non-party from funding a suit in exchange for a contingent interest in the recovery, a practice called champerty, the court said.

The loans created an effective ...