FRANKFORT — The Kentucky Senate is considering a bill to regulate the emerging "lawsuit-funding industry," in which companies advance money to cash-strapped plaintiffs to cover their living expenses in hopes of sharing in their courtroom paydays.

House Bill 412 trotted through the House in nine days, winning a 68-24 floor vote on Feb. 18. Now it faces a less certain future in the Senate Judiciary Committee, where it might be called for a vote Thursday.

"As an attorney, I don't like the business itself. But I'd rather see it regulated than not regulated," Senate Judiciary Chairman Tom Jensen, R-London, said Tuesday.

"We're still debating it among ourselves and among (Senate) leadership, and I've gotta tell you, it's mixed," Jensen said. "I don't know whether or not this is something we'll take up this session."

The industry, which began in the late 1990s, says it helps plaintiffs pay their bills so defendants — usually insurance companies — can't "starve them out" by stalling a case, forcing plaintiffs to drop the suit or settle unfavorably. The money does not pay for costs directly related to the lawsuit.

"Do you need cash now while you wait for your lawsuit to settle? Call Oasis Legal Finance. When you are approved, you will get a check in as little as 24 hours," offers a television commercial for one of the larger companies.

If the plaintiff wins, the company gets its money back, plus one or more fees, collecting from the award. The fees can equal an interest rate of 120 percent a year. In some cases reported in the national media, those fees have consumed most of a plaintiff's award after the lawyers were paid. But if the plaintiff loses, the company gets nothing.

Over the past three years, the American Legal Finance Association, representing the industry, has approached several legislatures to begin the state-by-state process of formally establishing itself in the statute books.

Now it has come to Kentucky. Funding companies from around the country have hired several Frankfort lobbyists and last year gave at least $8,650 to Kentucky politicians, including Democratic Attorney General Jack Conway's U.S. Senate campaign.

The attorney general's office helped the companies draft HB 412, which would impose state regulations on them — but on their own terms. Under the bill, companies would register with and be regulated by the attorney general, but there would be no cap on the fees or interest they could charge customers.

A large collection of business groups, including the U.S. Chamber of Commerce and the Kentucky Chamber of Commerce, is lobbying against the bill, arguing that it could encourage frivolous, costly litigation. The business groups also say there should be a cap on fees and interest to protect consumers.

But the industry says lawsuit-funding companies already operate in Kentucky, making state oversight the immediate priority during this legislative session.

"A few bad apples" in the industry are handing out business cards at car crashes and prodding people into litigation, said Ashley Blacketer, a lawyer who owns funding company Barrister Capital Group in Louisville.

"I don't think the industry as a whole is against rate caps. I think they're willing to work with regulators and legislators in different states on that issue," Blacketer said. "But I think the priority right now is getting some legislation in place."

The bill, sponsored by Rep. Johnny Bell, D-Glasgow, would require companies to tell customers the funding terms — including all fees — in large, bold printed type.

Companies would have to post a $50,000 bond with the state and could not engage in "unfair, false, misleading or deceptive practices." Customers must have a lawyer when they sign a contract, and they would have five days to change their minds after taking the money.

However, the bill also declares that sums advanced by the companies are not loans and therefore are not covered by usury laws that limit how much interest can be charged.

Blacketer, owner of the Louisville funding company, said loans by legal definition are "absolutely payable," but the money her company gives is repaid only if plaintiffs win. Therefore, it's not a loan, she said. The industry prefers the terms "funds" or "advances."

If the bill makes it to the full Senate, Sen. Julie Denton, R-Louisville, has filed a floor amendment to cap the companies' annual interest rates at 36 percent. The House defeated a similar amendment in that chamber.

The typical lawsuit-funding customer is someone with a small personal-injury case that left them injured, unable to work or pay their medical bills, Blacketer said. An average advance is $750, repaid within six months to a year after the case settles, she said.

"A lot of these people are living paycheck to paycheck," Blacketer said. "Five hundred dollars or $700 might not sound like a lot to you or me, but it is if you can't work and you're trying to pay your mortgage or keep your lights on."