The Georgia Supreme Court blocked a lawsuit against a litigation funding company Monday, ruling that such transactions can't be governed by lending laws because they're not really loans.

The difference is that plaintiffs in personal injury lawsuits don't have to pay the money back if they don't recover a judgment or a settlement, Justice Keith Blackwell said in the unanimous opinion. And they don't have to pay back more than they recover. So, instead of loans, these payments amount to high-risk investments—with matching rates of return.

The decision upheld the Georgia Court of Appeals, which overruled a trial judge who considered litigation funding to be high-interest lending.

“Like the Court of Appeals, we conclude that neither the Industrial Loan Act nor the Payday Lending Act applies to the transactions at issue in this case,” Blackwell said. “Accordingly, we affirm the judgment of the Court of Appeals.”

During oral arguments in May, appellate attorney J. Darren Summerville of the Summerville Firm told the high court that Cherokee Funding and other companies that advance cash to personal injury litigants are part of a “monstrous industry.”

Summerville represents Ronald Ruth, Kimberly Oglesby and a potential class of others in the same situation. They were hurt in car crashes and needed money while they waited for their claims to be settled. They hired a lawyer who had them sign powers of attorney, used to enter into agreements with Cherokee Funding. Ruth and Oglesby claimed in their lawsuit that they never saw the agreement or had it explained to them.

Ruth received $5,300 for living expenses until his claim settled, after which Cherokee demanded $84,000, according to the lawsuit. Oglesby received $400. When her claim was paid, her lawyer deducted $1,000 to repay Cherokee. Ruth and Oglesby said Cherokee charged a “monthly use fee” of 4.99 percent and compounded that and other add-ons for an annual rate of 80 percent. “It's illegal, because it's too high an interest rate,” Summerville argued in May.

“We are obviously disappointed with the result, Summerville said by email following Monday's opinion. “A court should grant a motion to dismiss—or affirm that treatment—only when under no set of facts may a plaintiff bring a meritorious claim.” He added the court didn't seem to be saying that.

Laurie Webb Daniel of Holland & Knight handled the appeal for Cherokee Funding. She told the high court during oral arguments that litigation cash advances are not loans at all, because they carry no guarantee of repayment. If the claim fails to bring a settlement, Cherokee cannot collect. Instead, she said, the arrangements are high-risk investments that carry a return “due to the inherent uncertainty of litigation.”

On Monday following the decision, Daniel said by email, “The starting point when construing a statute must be its text and, as the Court stressed, we must presume the legislature 'meant what it said and said what it meant.'”

The case is Ruth v. Cherokee Funding, No. S17G2021.