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On August 19, 2026, The New York Times published “How Wall Street Profits When Personal Injury Lawsuits Pay Out.” The investigation describes a national market in which companies provide cash advances to personal injury plaintiffs, pool the rights to repayment, and use those portfolios to attract institutional investors.
The article identifies serious concerns. In some cases, charges grew dramatically while lawsuits remained pending. It also examines allegations that financial incentives encouraged inflated claims or unnecessary medical treatment. Those concerns deserve attention. No funder should influence medical care, control litigation strategy, or hide the true cost of an agreement.
But the policy discussion cannot end there. If lawmakers focus only on the abuses described in the article, they may overlook why injured people seek funding in the first place – and who benefits when that option disappears.
A personal injury case can take months or years. During that time, the defendant and its insurance carrier usually continue operating with access to substantial financial resources. They can pay defense lawyers, investigators, medical reviewers, and expert witnesses. They can file motions, take discovery, contest treatment, and prepare for trial without worrying about next month’s rent.
The injured person lives on a different clock. A serious crash may produce medical expenses, lost wages, reduced earning ability, transportation costs, and new household needs all at once. Savings can disappear quickly. Credit may already be strained. For many Tennessee families, waiting another six months is not a litigation inconvenience; it is a financial emergency.
That imbalance affects bargaining power. Even when a claim is legitimate and well supported, immediate financial pressure can force a plaintiff to consider a settlement that does not fairly account for the harm suffered. A well-funded defendant does not necessarily need to win the case outright. Sometimes it only needs to outlast the person bringing it.
When only one side can afford to wait, delay itself becomes leverage.
The Times article will likely be cited in statehouses around the country by groups calling for tighter limits on litigation funding. Some proposals may be presented as consumer protection. That stated goal should be taken seriously. Predatory terms, misleading contracts, undisclosed conflicts, and outside control of legal decisions should not be tolerated.
At the same time, lawmakers should examine the practical effect of any proposal, not merely its label. A rule that makes responsible funding unavailable may protect consumers from one risk while exposing them to another: being pressured into an early and inadequate settlement because they cannot afford to continue.
Insurance carriers and business groups have an obvious economic interest in reducing the capital available on the plaintiff’s side of the courtroom. That does not make every reform proposal improper. It does mean legislators should ask who gains bargaining power if lawful funding is restricted, and whether the supposed cure would strengthen the very defendants who benefit most from delay.
While most other states fail to regulate litigation financing, Tennessee has already enacted a detailed Litigation Financing Consumer Protection Act governing consumer legal funding. Among other protections, Tennessee law requires clear written contracts, disclosure of the maximum repayment amount and annual percentage fee, a five-business-day cancellation period, registration and bonding requirements, and limits on fees and contract duration.
The law also bars a funder from directing the lawsuit, paying referral fees to lawyers or medical providers, giving legal advice, or misleading consumers. Importantly in light of the Times article, Tennessee generally prohibits the assignment – including securitization – of consumer litigation financing contracts to third parties, subject to narrow statutory exceptions.
Those safeguards matter because the most troubling examples reported in a national article may arise under different state laws and different contracts. Tennessee policymakers should study abuses wherever they occur, but they should not assume that every out-of-state practice is permitted here or use extreme cases to eliminate a regulated option for Tennessee consumers.
The choice is not between an unregulated market and a complete prohibition. Tennessee can protect injured people while preserving access to responsible funding. Sound policy should focus on the conduct that causes harm:
These protections target exploitation without creating a monopoly on patients for insurers and corporate defendants.
Lawsuit funding is expensive and should not be treated as routine. Whenever possible, an injured person should first consider less costly sources of support. But when an advance is truly necessary, an experienced personal injury firm can help the client understand how the agreement may affect the final recovery, compare available terms, and ask the right questions before signing.
A responsible law firm should receive no referral payment from a funding company and should never allow a funder to influence treatment or case strategy. Its role is to protect the client’s interests, explain the practical consequences, and help the client avoid an unnecessarily costly agreement.
This guidance can be especially important for Tennesseans who are unfamiliar with nonrecourse funding. Unlike an ordinary consumer loan, repayment is generally tied to the recovery in the legal claim. That feature can provide meaningful protection, but it does not make price, contract language, or the choice of provider unimportant.
The right question is not whether every lawsuit-funding arrangement is good. Clearly, some are not. The better question is how Tennessee can prevent abusive practices without depriving injured people of a lawful tool that may allow them to pay basic expenses and pursue a meritorious claim.
Before restricting access, policymakers should ask whether the proposal addresses a documented Tennessee problem, whether existing protections are being enforced, and whether the change would unintentionally reward delay. They should also hear directly from injured people who have faced the choice between accepting too little and finding a way to keep going.
Consumer protection should include protection from predatory terms. It should also include protection from a civil justice system in which financial hardship can be used to reduce the value of a valid claim.
Responsible funding can give an injured person time: time to complete necessary medical care, time to understand the long-term effects of an injury, and time for a lawyer to develop the evidence needed to evaluate the case fairly. Removing that option does not remove financial pressure. It simply shifts the benefit of that pressure to the better-funded side.
Tennessee should regulate genuine abuses without closing the courthouse door, little by little, on people who cannot afford to wait.
EDITORIAL REFERENCE The New York Times investigation (August 19, 2026)
