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It is becoming very clear to me that my industry, the lawsuit finance industry, does a very lousy job of promoting itself. That might be because some of us might, simply, do a lousy job. Some, clearly, do a great job. I believe that my company, Lawsuit Financial, is one of those. Since I became an InjuryBoard member, I have found, read, and commented on a number of past, legal finance related, blogs penned by IB members. My latest discovery is "I Need Money Now!!!", posted on August 8, 2008, by IB member, Jon Lewis.

In his post, Jon correctly states that lawsuit cash advances can be expensive. He incorrectly calls the rates charged ‘usurious’. As previously stated at this location, a lawsuit funding company advances money to people it has never met, who are represented by attorneys it can’t always qualify; then it excuses the whole thing if the case loses. Lawsuit Financial is a company that will also provide a settlement appropriate compromise if the case does not meet expected success. Considering the risk of loss or potential, substantial, compromise, these transactions do not involve an "absolute" and, therefore, by definition, cannot be usurious.

Jon claims that the funding company is not taking a "huge risk" because their underwriters might be attorneys (in my experience, most are not) and because they "will not loan money to these clients without discussing the case with the [handling] attorney". Now, I am not going to deny that we try to underwrite for success, who wouldn’t? And talking to the handling attorney? What underwriter would not talk to the handling attorney to get his take on the situation!? Does that guarantee success? How does the funding company assess the quality or talent of the attorney? How is this any different than attorneys assessing case quality (injuries and liability) before deciding to take the case on a contingency and spending his/her own money on litigation costs? As someone who runs a company that does take risk, who has lost cases, who has been short-paid, not-paid, and cheated, I strongly disagree with Jon. There is "huge risk" in placing investment dollars in the litigation of others. Attorneys will only do it in their own litigation. Why, do you suppose, is that?

I do agree with Jon about deceptive advertising. "It’s your money, use it when you need it" or slogans like that are, in my opinion, shameful, when used as an enticement to get someone to sell you a valuable income stream for pennies on the dollar. I do not solicit structured settlement purchases; I only do them when attorneys call me to use my financial connections to get their client a better deal than the client is getting from someone who solicited him. I also counsel these clients, if they are sent to me, that they can sell small parts of structures to get the money they need; they can sell small parts of payments or one of many payments; they rarely need to sell an entire structure. IB members have my solemn pledge that I will never solicit their clients for structured settlement purchases.

Jon says that litigation funding companies "use emotion to entice clients to call them" and that we use the fact that it is hard [for clients] to pay bills "to our advantage". Jon: I don’t get the objection. Clients who aren’t having trouble paying their bills don’t need our service; it is those who are having trouble that need our help. With the assistance of the handling attorney (who is always involved in every transaction we do), the least amount necessary, always at an appropriate time in the litigation, should result in increased case proceeds and little or no actual cost to the client (when adjusted for the results the company’s help made possible).

In very strong terms, Jon closes, and accuses the legal funding industry of "stealing" money from "these unfortunate individuals". He encourages legislation. Jon should be pleased to know that there is sensible regulation in Maine, Ohio, Florida and New York and there are ethics opinions that govern litigation funding in most other states. www.lawsuitfinancial.com or www.lawsuitfinanceblog.com has a list of those states and the ethics opinions in each, available to all attorneys who visit.

I will repeat what I have said previously at this location. Jon and others are painting an entire industry with a very broad brush. Saving a valuable asset like a house or a car for a client and taking only a pending case as collateral for doing so is not ‘stealing’. ‘Ethics’ are individual qualities; some companies have them and some don’t. InjuryBoard was founded on the notion that some lawyers have them and some don’t. Lawsuit Financial provides its service in the interest of justice; for the purpose of taking financial pressure off plaintiffs to settle cases early and cheap and saving their valuable assets. Lawsuit Financial funds only the smallest possible amount to save that valuable asset, to get your client through difficult times, and only for an amount that the case value can easily afford. We also provide reasonable compromise if our funding, because of faulty underwriting predictions by the attorney and/or me, get in the way of a fair settlement. Lawsuit Financial markets its service to attorneys, not specifically or directly to clients. If you, the attorney, does not feel that a particular situation is right for your client, just say "no". If you have any questions about legal funding, just want to shoot the breeze about it, or, like Jon, want to violently protest, call me, toll free, at 1-877-377-SUIT (7848). I will be happy to discuss ethical legal finance with any of you.

One Comment

  1. Gravatar for Mike Bryant
    Mike Bryant

    As always very interesting insight into these situations.

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