Supreme Court of Ohio · US (OH) · 2003 · Decided; agreements void. Later superseded by Ohio statute regulating consumer legal funding
Citation/Docket: 99 Ohio St.3d 121, 2003-Ohio-2721, 789 N.E.2d 217
Posture: Consumer vs. pre-settlement funders, seeking to void the advances
Funder(s) involved: Interim Settlement Funding Corp. and Future Settlement Funding Corp.
Roberta Rancman, injured in a car accident, took a $6,000 advance in exchange for the first $16,800 of any recovery within twelve months, rising to $27,600 within two years. The court of appeals had held the advances were unlicensed loans.
The Ohio Supreme Court skipped the usury question and voided the advances outright as champerty and maintenance, holding that a contract making repayment contingent on the outcome of a pending case gives a non-party an impermissible interest in the suit, impedes settlement, and promotes speculation. Its line that a lawsuit is not an investment vehicle became the most quoted sentence in American anti-funding case law.
This is the high-water mark of the old rule, and the Ohio legislature promptly overrode it by statute. It explains why the entire consumer funding industry now writes strictly non-recourse contracts and lobbies state by state.
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Compiled from public sources (court filings, published opinions, and secondary reporting) as part of the Institute's Phase 1 Dispute Library research. This is educational material, not legal advice; case citations should be independently verified before relied upon.