Legal Blog

High Interest Rate on Lawsuit Cash Advance Not Usurious Because Not a Loan, Court Says


"This is a significant new opinion from an appellate (higher) NY court upholding the enforceability of cash advance transactions in New York. The case involved funding plaintiffs in litigation but the same principles on which the court--unanimously-- decided, apply as well to merchant cash advances in your business. Making sure you are aware….." — Stuart Newman

As Published in the New York Law Journal 

A company that invests in personal injury lawsuits was not usurious in charging an annual percentage-rate return of 45.93 percent on an advance of money to a plaintiff because “the repayment of principal is entirely contingent on the success of the underlying lawsuit” and thus is not a loan, a state appeals court has ruled.

An Appellate Division, First Department panel also ruled that interest rates at issue were not unconscionable because the lawsuit’s plaintiff, Arthur Brunetti, failed to show that he “did not have a meaningful choice in entering into the agreement [with the company, Cash4Cases,] and that the terms of the agreement were unreasonably favorable to plaintiff.”

The underlying lawsuit was brought by Cash4Cases against Brunetti after he received settlement proceeds in his personal injury suit but refused pay Cash4Cases pursuant to the two sides’ “Agreement for Purchase of Claim,” the panel wrote in Cash4Cases v. Brunetti.

For more read the New York Law Journal 


ABOUT STUART NEWMAN |  347.589.8535

Stuart B. Newman has been engaged in corporate and securities practice for over forty years, focusing on corporate law, private equity transactions, mergers and acquisitions and capital formation. Stuart studies his clients’ businesses thoroughly and has made valuable contributions on a range of business issues such as joint ventures, product development, finance, investment banking, marketing and personnel. He has served as a director on the boards of both publicly-traded and privately held








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