Cash For Comp

In Connecticut, an attorney cannot lend money to his client or advance money while the case is pending. This is in violation of the Rules of Professional Conduct.

However, there are a number of financing companies which have arrived upon the scene of personal injury and workers’ compensation cases in the last several years. These companies charge interest rates that are significantly in excess of the interest rates allowed under the Connecticut state law for loans. However, the companies are able to avoid violating the lending statutes (usury laws) because in strict terms, they are not lending money since there is at least some chance they will not get this money paid back to them if the claimant does not prevail in his or her case.

A word of caution is needed here. The terms of these financing arrangements are very harsh, and very difficult to avoid once her contract has been signed and the money advanced. The injured claimant should avoid this type of treacherous financing arrangements at all costs if possible. While it may seem like an attractive alternative in order to get some immediate infusion of cash when an insurance company may be denying benefits, the amount that the claimant will have to pay back to the financing company upon resolution of the case must be carefully weighed in comparison to the much smaller amount of the initial payment by the financing company.

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