New York Court Allows for Discovery of Litigation Funding Loan

Generally, litigation funding loans are not discoverable in personal injury actions. These are “loans” given to injured plaintiffs as an advance on any settlement or verdict they might obtain. These “loans” are not subject to usury rates. However, in Smartmatic, the court allowed for discovery of a litigation funding loan because it was material and necessary to the defendant’s anti-SLAPP counterclaim, which involved an element of the plaintiff’s financial motivation to sue. While this should not allow for blanket disclosure of these “loans,” in a personal injury case where there are claims that the accident was fraudulent, Smartmatic does provide a basis to argue that discovery of these agreements is warranted. 

_{Case Law Alerts, 3rd Quarter, July 2024 is prepared by Marshall Dennehey to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2024 Marshall Dennehey, all rights reserved. This article may not be reprinted without the express written permission of our firm.}