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Kalish has been a partner at Steinberg Goodman & Kalish in Chicago since 1997. Specializing in medical malpractice, he never recommends lawsuit loans to his clients. "I don't care about high interest rates," says Kalish. "I am fine with them because there are interest rates for every risk product out there. If a company wants to take a chance, OK, that's a risk it's willing to take. The problem is that these loans hamstring the plaintiff 's lawyer. They change how a reasonable plaintiff should think and act." Kalish does not see a place for the loans in the justice system. In his experience as a contingency-fee lawyer, clients borrow money early on in the process, and then later, when the case goes through discovery, perhaps becoming more dif- ficult, the whole value of the case can change. This leaves the plaintiff with a loan and leaves the lawyer in a serious bind. "If my client has borrowed $50,000, he cannot then settle and end the case for $20,000. The settlement value drops. In these cases, I recommend that the client settle, but they cannot; they know that if they do, they will have to pay back the loan." He sees the loans as a lose-lose proposition. "The client has not put a penny into his case. I, on the other hand, have put two years of my time and $10,000 in expenses into the case. And then this little loan gets in the way. If I see that the case is a dog after a year or so, I will walk away. Then I am out $10,000, the client owes $50,000, and his whole case may be worth $40,000. Everyone loses." Connecticut-based lawyer George M. Kelakos doesn't see it that way. Kelakos heads his own company, Kelakos Advisors LLC, and works for the American law firm, FSB FisherBroyles. He has represented opportunistic buyers of patent assets and believes the loans are mostly a good idea. "I have been in the distressed [patent] business for 29 years as a lawyer and an adviser. I don't judge the loans. There are times when you don't have money and your options are limited. You put up with the high cost because it is the only kind of loan you can get. I have bit my tongue when I've heard some of the fees and the inter- est rates, but then I turn to the client and ask what he wants to do. And when he asks me what his options are, the answer is usually not many." Kelakos doesn't see any other way for small companies and individuals to protect their rights. "If you're an inventor and you have something that you put a lot of sweat equity in, and a lot of money, and you want to protect your rights, then loans make sense. I look at it from a property rights point of view. If you find out a very big company is stepping on your space, what do you do? You can hire a lawyer and send them a letter, and then what? The next thing you know they in turn take action against you and want to examine your patent search." Patent litigation can take years and cost millions of dollars. This is obviously very daunting for the small-time plaintiff. So, says Kelakos, "if someone out there can provide the money, the inventor can afford a firm that may work on contingency, but not 100 per cent." There are a lot of expenses that accompany even a contingency lawyer's fee. THE FUNDAMENTAL PROBLEM more options to finance litigation because the price is beyond the reach of most Canadians. And although this is true, I don't believe the answer is to create more options of funding it. The best answer is to reduce the price of litigation. That's the fun- damental problem." Furlong says the failures of the justice system to ensure J that litigation and going to trial are available regardless of how much money people have is manifest. "Lawyers often say 'I couldn't afford to hire myself' about the high cost of litigation, and that's actually not very funny," he says. "At the same time, there are obvious drawbacks and red flags regarding the loans. In the Giuliani case, what's interesting is that the judge doesn't pass judgment on third-party litigation per se. By any stretch of the imagination, the facts of that case justify the judge's descrip- tion as unconscionable," but he was angry at the interest rates, not the loan company, says Furlong. The one thing that just about everyone can agree on is 38 N O VEMBER / D ECEMBER 2011 www. CANADIAN Lawyermag.com ettlementLenders_CL_Nov_11.indd 1 11-10-25 10:14 AM ordan Furlong, a partner at Edge International Consulting, believes giving plaintiffs more options is not the solution. "We are saying we need to bring in more people and offer