Opinion

Chamber Of Commerce: Defender Of Free Enterprise Or Purveyor Of Insurance Cronyism?

The U.S. Chamber of Commerce markets itself as being the voice of business inside the nation’s capital, where they advocate for a “pro-jobs, pro-growth agenda.” The Chamber spent $124 million to lobby on this agenda in 2014 – topping the list of Washington’s biggest spenders yet again.

But all it takes is a trip outside the beltway, to a small committee room in Indiana’s state house, to hear the self-proclaimed defender of American free enterprise singing quite a different tune. That’s where, last week, U.S. Chamber representative (and former Georgia Attorney General) Thurbert Baker confirmed to lawmakers that the Chamber would like to see an entire industry regulated out of existence.

Why was the group that claims to represent “the interests of more than 3 million businesses,” including mom-and-pop shops and corporations alike, actively lobbying for industry-killing regulations that would all but  abolish a business that is not only legitimate, but also highly in demand by consumers?

The answer to that question could be the topic of a book titled “Corporate Cronyism 101: How to Manipulate Legal Systems for the Benefit of Select Chamber Members.” And Baker’s comments could fill more than one chapter.

Since 2008, the Chamber’s Institute for Legal Reform (ILR) has aggressively attempted to define and promote a legal reform agenda that benefits the nation’s largest insurance companies (and its executives). But a closer look reveals that its agenda comes at the expense of claim holders and working-class Americans.

Unable to gain ground on its traditional legal reform agenda (e.g. weakening labor contracts, limiting class action lawsuits, instituting settlement caps, etc.), and in a far-fetched maneuver to continue its “anti-lawsuit abuse” messaging, the Chamber has fixated on the consumer legal funding industry.

Consumer legal funding is a financing option that hundreds of thousands of hardworking Americans have turned to in difficult times. When consumers are injured, their economic losses can be compounded by the long wait for insurance companies liable for the other parties’ actions to settle their claims.

Legal funding is a solution for the working-class Americans who need to bridge this financial gap. This comes in the form of a property right purchase, of which a legal funding company bears the entire risk. It’s a tool that allows them to make ends meet while they wait for a full, fair settlement.

Big Insurance, however, has an incentive in the long wait; it knows that financially vulnerable consumers will see their personal expenses continually mount higher the longer they are tied up in the legal process, often causing them to drop claims or settle for much less than it’s worth. (In fact, over the years, they have institutionalized this method of increasing profits, using complex software to systematically underpay injury claims.)

Meanwhile, they’ve made false claims that legal funding prolongs litigation (fact: legal funding companies only assist individuals who have existing claims) and distorts the civil justice system (fact: legal funding cannot be used to pay for case costs).

This gets us back to the scene that played out in Indianapolis with Thurbert Baker. Baker advocated for price controls on legal funding, even though insurance companies themselves have been vocal leaders against such government intervention. He suggested there were high interest rates incurred by legal funding consumers, but the Chamber was silent on other more costly alternative services such as payday lenders, title pledge lenders and pawnbrokers, that are priced well in excess of 100 percent. In closing, he gave lip service to preferring to see legal funding properly regulated than banned; it was rather disingenuous, though, considering he spent part of his remarks boasting of the “great effort” he “fought” to pass recent legislation in Tennessee – legislation that crippled the industry and forced it out of the state.

After running through his talking points, he quickly departed the hearing before industry representatives had their chance to counter his opinions – a dubious exit, but perhaps a fitting one given his and the Chamber’s wildly hypocritical stance.

Remarkably, Baker made no mention of his previous experience with the industry as Georgia’s attorney general. There he enjoyed such a strong and supportive working relationship with consumer legal funding companies that he asked the industry to host a political fundraiser in association with his failed run for governor – an event he eagerly attended.

As the consumer legal funding industry continues its proactive engagement in Indiana and in dozens of other states, to create the appropriate regulatory standards under which all legal funding companies should operate, it is our hope that state lawmakers will see the U.S. Chamber’s agenda for what it truly is – the promotion of self-serving public policy that marginalizes middle and low income Americans in order to protect corporate profits.

Eric Schuller is President of the Alliance for Responsible Consumer Legal Funding.