Lawsuit Lender’s Suit Against Disbarred Lawyer Reveals ‘Hefty’ Interest Charges
A lawsuit loan company that advanced $25,000 to an Atlanta lawyer and his law firm in exchange for a stake in the litigation has filed a lawsuit that shines a light on its high-interest financing method.
The lawyer named as a defendant, Earl Davidson, has been disbarred for misusing trust account funds, according to the Fulton County Daily Report. The lender, Lawsuit Financial Inc., says in the lawsuit (PDF filed by the Fulton County Daily Report) that recovery of principal and potential profit are contingent on the outcome of the litigation it backs. The repayment terms can be “hefty,” according to the publication.
The suit says Davidson gave Lawsuit Financial a stake in 10 lawsuits and promised to pay interest amounting to more than 100 percent each year for successful results. In one case he received a $5,075 advance to be repaid with an additional $3,500 every six months if the subject lawsuit succeeded, the suit says. The suit names both Davidson and his former law firm, Giddens, Davidson & Mitchell.
Lawsuit Financial President Mark Bello, a former personal injury lawyer, told the publication that only about 5 percent of his business consists of loans to lawyers. Most of the loans are made to plaintiffs and are in the range of $1,000 to $5,000.
Bello was unaware that Davidson had been disbarred until the legal newspaper informed him. He didn’t seem surprised, the publication said.
“Obviously, anytime an attorney is getting advances from a company like mine, they may be having issues,” he said. “But he was with a well-regarded firm, [and had a] good reputation, member of the bar in good standing when I checked.”
A lawyer from Davidson’s former firm did not know of the lawsuit. “Oh, no,” said partner Kenneth Mitchell when he answered a call from the newspaper’s reporter. “We’ve got enough problems.”
