Firm Gets Into Trouble for Lawsuit Loan

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A company that advanced an Atlanta lawyer and his firm $25,000 for a portion of potential payouts from a sheaf of cases says that it never got its money nor interest payments topping 100 percent annually.

Lawsuit Financial Inc. of Southfield, Mich., sued Earl A. Davidson and his firm, Giddens, Davidson & Mitchell, in Fulton County Superior Court earlier this month to collect its $25,000 and many times that sum in fees and interest.

Complicating matters is that Davidson, the attorney in question, was disbarred last month by the state Supreme Court for misusing funds in his trust account, not paying his dues to the State Bar of Georgia and not complying with continuing legal education requirements.

Davidson could not be reached, and his former partner, Bobby L. Giddens, did not respond to a request for comment. But firm partner Kenneth Mitchell, reached by telephone, was dismayed at news of the action.

"Oh, no," said Mitchell. "We've got enough problems." He said he was "completely unaware" of the suit.

Lawsuit Financial is one of a growing number of businesses in the litigation finance industry, which is generally engaged in providing money to plaintiffs who pledge to pay back the funds if they successfully resolve their cases.

Businesses providing such "non-recourse" loans can be found on the Internet. They offer to take the financial pressure off plaintiffs as they wait for their litigation to proceed.

A review of various state bar regulations and legal periodicals reveals that, although often termed "loans," the advances are generally regarded by state regulators as investments, so the companies are not bound by traditional bank regulations and usury laws.

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