SPRINGFIELD, Ill. - Illinois' so-called "Lawsuit Loan Shark" bill failed by a large margin during a House floor vote Thursday night.

Even the bill's chief co-sponsor, out-going State Rep. Jay Hoffman, D-Collinsville cast a no vote on an amendment to SB3322. The vote on House Floor Amendment 2, which, among other things limited lending fees to 75 percent, was 87-28 with one House member voting present.

Earlier on Thursday, the amended bill passed in the House Judiciary - Civil Law Committee by a vote of 11-5. There are 10 Democrats and seven Republicans on the committee.

Known as the Non-Recourse Civil Litigation Funding Act, the bill would allow funds to be lent to litigants as their case proceeds through the court system. The proposed legislation has been criticized as an incentive for meritless lawsuits.

Newly elected state Rep. Dwight Kay (R-Glen Carbon) criticized the bill, saying it would be "very detrimental" to job creation in the state.

"I am not opposed to lawsuits that are filed and have merit," said Kay, who beat Hoffman in the November election.

"But I don't know why we would want to do something of this nature in this state, especially given our legal climate already," he said.

Under the proposed legislation, lawsuit lenders would not be subject to state consumer loan regulations, which have gotten tougher in recent years under state Attorney General Lisa Madigan's administration. Instead, lawsuit lenders would be under the watch of the Department of Professional Regulation.

Madigan's office was unavailable for comment on the bill Thursday.

Kay, who will be sworn in on Jan. 12, said while he hasn't read the bill in detail, he was disturbed by its concept.

"I don't see any reason why we would want to do that in the state of Illinois," he said of the lending proposal.

He said Illinois is already struggling to keep companies here, much less trying to attract new businesses to the state.

"One of the primary reasons is, we as a state are known by reputation to be very, very lawyer-friendly -- and I'm talking about trial lawyer-friendly," he said.

Cook County, Ill., home of Chicago, came in fifth on the American Tort Reform Association's list of "judicial hellholes" in 2010. The "hellhole" has been on the list every year since 2005.

Al Adomite, vice president of the Illinois Civil Justice League, watched the vote go down Thursday.

"I think, as the day went along, legislators started realizing the rates were pretty comparable with those of payday loans," he said. "I think when they saw them side-by-side, they became less and less comfortable with it."

Adomite said the coalition was happy that lawmakers took a close look at both sides before making a decision.

And while the bill received a very strong rejection, it isn't completely dead, Adomite said.

The General Assembly goes until Wednesday morning, he said. "But to get two 11th hour votes would be surprising. Never say never in Illinois."

Still, the question remains how the practice of lawsuit lending fits into current state law, Adomite pointed out, and how damaging its effects.

"At this point, we're just really thankful legislators paid close attention to it," he said.

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.