Foley partners Geoff Bracken and Scott Ellis helped defeat a putative class action case against Cherokee Funding, LLP, an Atlanta-based litigation funding company, by a group of former clients who claimed that their contracts with the company violated state usury laws.
The Georgia Supreme Court, in a unanimous October 22, 2018 ruling, held that legal case "investments" such as Cherokee's are not loans and are therefore outside the scope of state usury laws.
While acknowledging some ambiguity in the definition of a loan under the laws, the court drew a hard line between a traditional recourse loan and Cherokee's cash advances, which the client is only obligated to repay if his or her claim results in a monetary reward.
The case had been closely watched by the consumer legal funding industry, which has come under increasing regulatory and legislative scrutiny in a number of states.
Read more about the case here