At least one company has found a business opportunity in Merck & Co.'s $4.85 billion deal for a global settlement of thousands of personal-injury cases involving the painkiller Vioxx.

A loan company called Counsel Financial Services is running ads on www.law.com, the Web portal for the American Lawyer Media family of legal publications. Against a blood-red backdrop, the ads read "Breaking News: Vioxx Settles," and announces, "We fund Vioxx attorneys."

Counsel Financial, of Amherst, New York, is a company that offers loans to plaintiffs' law firms, allowing them to bet against the recoveries they expect to receive on their contingency cases.

The firm's Web site claims it is the "only law firm financing company" endorsed by the American Association of Justice, or, as most people have known it until its recent name change, the American Trial Lawyers Association, the powerful lobbying group.

Credit lines range from $50,000 to $25,000,000. "Loan interest is 100 percent tax deductible as a 'necessary and ordinary' business expense," Counsel Financial points out on its website. "And in most states, financing charges on behalf of client expenses can be charged back to the client. . . . As a result, loans for client expenses are virtually interest free!"

Well, not exactly. Megan Brooks Payne, who handles new loan applications at Counsel Financial, said the company charges "credit-card interest" interest rates, which "typically" range from 18 to 20 percent per year.

"There are a lot of attorneys who are going to have expenses to document the injuries" under the global settlement, Payne said. "We can help them in leveraging their Vioxx cases to do so."

The company's clients already include "quite a number of firms that had Vioxx cases in their portfolios, before the settlement was announced," she said. Law firms can use the money from these loans for any expense, not just those related to their Vioxx cases.

At least one firm isn't buying: Kim Wilson, a lawyer with Lewis & Roberts in Raleigh, North Carolina, began soliciting Vioxx plaintiffs when Merck withdrew the painkiller in 2004. The firm, which has 10 lawyers, eventually signed up about 50 clients with serious injuries, such as suffering a heart attack or stroke.

Over three years, the firm has spent about $300,000 on the litigation, and Wilson has received—and rejected—many solicitations from litigation financing firms. "We didn't go there; we would never do anything like that," she said. "You are asking for trouble."

That's true, she says, even now that Merck has agreed to a global settlement. Wilson is spending every moment parsing through the drug maker's 70-page deal and interpreting it on behalf of clients. "We have no idea of what the value of any individual case will be, so there are still lots of questions," Wilson said.

Some litigation lenders don't stop with the law firm. "Where it really gets nasty is when they contact the client and say, 'You can borrow off your potential Vioxx settlement,'" says Wilson.

Many of her clients are low to middle-income and struggling to pay their bills. Wilson repeatedly advised people to stay away from the loans, and that she would not help them in getting one.

"Is there a place for these companies? I guess so, because they exist. But not at my law firm," says Wilson.

Counsel Financial, for one, does not finance plaintiffs, only their law firms.

by Karen Donovan