Lawsuit Funding: What Is It Really?
There has been much written about capitalist investors and wall street hedge fund rushing into the lawsuit funding industry. Recently, an article published in the New York Times Magazine suggested that thanks to these investors buying shares in other people’s lawsuits that they may be warping the legal system. “Trial By Money,” by Mattathias Schwartz, NY Times Magazine, October 26, 2015.
In his article, Mr. Schwartz mistakenly argues that litigation finance or lawsuit funding, as we know it today, has its roots in the antiquity of ancient Rome when Athenian political clubs or wealthy bankers bought shares of lawsuits. He writes later, in medieval England litigants could hire “champions” to represent them in trials – later compared to prostitutes who’s prevalence hastened to the movement of dispute resolution in the courtroom. During the Middle Ages, he writes, this became know as “Champery.”
Forbes describes lawsuit funding and litigation finance as an investment whose time has come. “Lawsuit Funding Lures Investors, Plaintiffs & Lawyers,” Forbes online, February 20, 2014.
The Economist predicts that lawsuit funding to be a high growth and high return business because investors who pay for lawsuits through litigation funding in exchange for a share of the settlement. “Fat returns for those who help companies takes legal action,” April 6, 2014. In most instances, lawsuit funding arises out of the disparity in power, wealth and access to the legal system – the David & Goliath paradigm if you will. How can lawsuit financing that levels the playing field be compared to prostitution while making no mention of well-funded political action packs and wealthy companies who use shareholder cash to advance their interests?
WHO IS KIDDING WHO?
There is a built in bias to the argument that lawsuit funding and litigation financing warps the legal system or may cause courts to give larger settlements. That is the Goliath story where the powerful and well-funded special interest groups behind those who pollute our environment, sell dangerous products or practice predatory business practices who rip-off the intellectual property of start-up companies, enjoy an advantage over David.
For those who have actually been in the litigation trenches and survived it is well known that the courtroom delays and docket stall is caused endless litigation tactics of the Goliaths in the courtroom. After all, what plaintiff does not want a swift and speedy resolution to their claims so they can move on with business.
Passive Lawsuit Funding Is Not “Champery.”
Lance Lawsuit Funding makes passive investments, unlike the medieval “Champery” described above. Lance Lawsuit Funding, for example, provides plaintiff funding to people with personal injury cases who are already working with lawyers. Like most of the lawsuit funding industry, Lance Lawsuit Funding does not get involved in the litigation of the case. All legal strategy decisions are left to the plaintiff and his/her lawyer. All decisions about expert witnesses, trial strategy and settlement or trials at left totally in the hands of the lawyer and client.
The Non-Recourse Loan and Passive Investment Litigation Financing.
A non-recourse loan is sometimes referred to as case funding. In the lawsuit financing business it means that when a lawsuit funding company advances money to a plaintiff, that he does not have to repay it if there is not settlement. In essence, the plaintiff’s settlement is a contingency that has to occur before the money is repaid. If there is no settlement, then the plaintiff is not obligated to repay the funder.
Now here is the important part. In plaintiff lawsuit funding often the money is not to be used for the trial by the lawyer. It is for the plaintiff’s personal emergent living expenses. This is an important distinction between some forms of litigation finance and lawsuit funding.
Lance Lawsuit Funding, for example, provides money to plaintiffs who already have personal injury lawsuits pending and are working with a lawyer. The money that Lance Lawsuit Funding provided to a plaintiff is to be used for personal living expenses to help them with the financial crisis of their disabilities while waiting for case to be settled. The money is not used for the lawyer or trial expenses.
Lance Lawsuit Funding provides a service for people with personal injury cases who are suffering with disabilities. Often because of a poor credit or employment history they cannot go to banks. Lance Lawsuit Funding, however, bases it funding decisions on the merits of their case – not their credit or employment history.
Lawsuit Funding Bets On the Little Guy.
Lance Lawsuit Funding bets on the little guy – the man or woman who cannot wait months or years for their case to settle. They don’t have to accept an inadequate settlement out of financial desperation. In some cases, Lance Lawsuit Funding has helped clients to buy cars to get to work, hold on to homes or pay bills. Lance Lawsuit Funding is in the business of betting on the little guy – the David.
How Lance Lawsuit Funding Works.
1. A plaintiff who has a pending personal injury case and working with a lawyer will contact a lawsuit finance company, like Lance Lawsuit Funding.
2. They will be asked a little bit about their case.
3. Then, Lance Lawsuit Funding takes it from there. They contact the client’s lawyer to get documents that support the claim. A decision to provide funding can usually be made within 24 hours.
4. The cash advance is non-recourse loan that does not have to be repaid if there is no settlement.