Emanuel “Manny” Friedman is willing to do what other millionaire hedge-fund managers would rather avoid: dial for dollars.
Call into one of his quarterly portfolio updates as a noninvestor and a few minutes later you are apt to get a quick private call from Mr. Friedman himself offering up his personal line for follow-ups, according to people familiar with the firm. Ignore the pitch, and he will ring again the next time you call in and again the next.
With a series of unconventional tactics, Mr. Friedman has built a more than $6 billion hedge-fund firm and earned his investors, including clients of Blackstone Group LP, far-above-average returns.
He has turned heads beyond the numbers. The past two years at a swanky Las Vegas hedge-fund conference, he wore a T-shirt featuring a butterfly, skull and crossbones and cheetah. The image, Mr. Friedman said, is a representation of the struggle between good and evil.
The former co-founder of investment bank Friedman, Billings, Ramsey Group Inc. landed in the headlines recently for earning some of the biggest profits from the U.S. government’s bailout of small banks following the 2008 financial crisis.
But Mr. Friedman’s next act may be his most unorthodox: His Arlington, Va.-based EJF Capital LLC has raised hundreds of millions of dollars for a new litigation-finance arm that will lend to law firms pursuing class-action injury lawsuits, people familiar with the firm said. The firms will repay EJF at hefty interest rates as they earn fees from settlements and judgments.
The suits include those related to transvaginal mesh, a medical treatment that props up organs protruding into the vagina, and Risperdal, a former top-selling Johnson & Johnson schizophrenia drug that causes the abnormal development of breasts in some men, people familiar with the firm said.
That is a new arena for a manager who made hundreds of millions of dollars after the financial crisis by buying mortgage securities, including risky ones his own firm described as “dirty pools,” and later became one of the biggest hedge-fund purchasers of the federal government’s investments in smaller U.S. banks, investors said. In some instances, EJF profited when it sold the shares back to the banks at a premium.
In January, a special inspector general for the U.S. bank bailout lamented that private investors could “come in quickly and flip and profit.” Three private investors scooped up nearly half of the taxpayer-backed investments auctioned by the government.
Mr. Friedman defended his interest in the government’s Troubled Asset Relief Program, known by its acronym TARP. “Investing is a two-way street,” he said in an emailed response to written questions. “There may be situations in which Treasury lost money, but the taxpayers, the government and the country came out ahead on these sales because so many banks became healthy.”
EJF’s main fund has earned an average annualized return of more than 17% after fees since inception in 2008, according to investor documents reviewed by The Wall Street Journal, compared with just under 6% for peers, according to research firm HFR.
Assets under management have roughly doubled over the past two years. Blackstone is the largest external investor, a person familiar with the situation said.
EJF is an unlikely turn for Mr. Friedman, who at age 68 is a decade or more past the usual retirement age for his peers. The son of a rabbi in Wilmington, N.C., Mr. Friedman used his bar mitzvah money for his first stock purchase in August 1961 and made a $60 profit. He taught history at a middle school to pay for night law-school classes at Georgetown University and then took a job as a stockbroker.
In 1989, he co-founded Friedman Billings, but his tenure ended amid an insider-trading scandal in 2005. The investment bank and Mr. Friedman, who was co-CEO and co-chairman at the time, settled the Securities and Exchange Commission’s civil charges and paid millions of dollars in penalties. He neither admitted nor denied wrongdoing.
Five months after resigning, Mr. Friedman launched his hedge-fund firm and seeded the new company partly with his own money. He now oversees about 70 employees on three continents.
“I love the intellectual challenge of the market, coming in every day after 50 years and realizing that I know virtually nothing,” Mr. Friedman said.
His latest decision to lend to law firms invites new complications. Several investors said they had passed on the litigation fund because it appeared far afield from EJF’s past ventures.
Mr. Friedman said the new fund is part of a larger effort to press forward in areas in which banks are retrenching from lending.
EJF has also amassed positions in companies that manage mortgages for investors and other lenders that could benefit from regulatory changes to clamp down on banks. In Europe, EJF is among hedge funds buying beaten-up bank and specialty finance assets such as distressed lenders, a popular move that has seen muted returns thus far amid the eurozone’s political woes.
EJF’s main fund is down about 1% in the first two months of this year, according to investor documents reviewed by the Journal, as Europe’s recovery has faltered.
Mr. Friedman compared the European lending environment to the Sahara and said the trade would ultimately prevail as the area rebounds.
Emanuel “Manny” Friedman is willing to do what other millionaire hedge-fund managers would rather avoid: dial for dollars.
There’s a potential new law being enacted in the state of New Jersey. The Act has a long way to go before being approved, but the Act would limit what lawsuit funding companies can charge. It also details a strict guideline for all funding companies in how their agreement will read for the consumer/plaintiff.
Take a look below and call us if you have any questions at 215.599.6545.
AN ACT concerning consumer litigation funding and supplementing Title 56 of the Revised Statutes.
BE IT ENACTED by the Senate and General Assembly of the State of New Jersey:
1. This Act shall be known as the “Consumer Litigation Funding Act.”
2. As used in this act:
“Advertise” means publishing or disseminating any written, electronic or printed communication or any communication by means of recorded telephone messages or transmitted on radio, television, the Internet or similar communications media, including film strips, motion pictures and videos, published, disseminated, circulated or placed before the public, directly or indirectly, for the purpose of inducing a consumer to enter into a consumer litigation funding.
“Charges” means the amount of money to be paid to the consumer litigation funding company by or on behalf of the consumer, above the funded amount provided by or on behalf of the company to a New Jersey consumer pursuant to this act. Charges include all administrative, origination, underwriting or other fees no matter how denominated.
“Consumer litigation funding” means a non-recourse transaction in which a consumer litigation funding company purchases and a consumer assigns to the company a contingent right to receive an amount of the potential proceeds of a settlement, judgment, award, or verdict obtained in the consumer’s legal claim.
“Consumer litigation funding company” or “company” means a person or entity that enters into a consumer litigation funding with a New Jersey consumer. This term shall not include: an immediate family member of the consumer; an attorney or accountant who provides services to a consumer; or a bank, lender, financing entity, or other special purpose entity:
(1) that provides financing to a consumer litigation funding company; or
(2) to which a consumer litigation funding company grants a security interest or transfers any rights or interest in a consumer litigation funding.
“Commissioner” means the Commissioner of Banking and Insurance.
“Consumer” means a natural person who has a pending legal claim and who resides or is domiciled in New Jersey or has a legal claim in New Jersey.
“Funded amount” means the amount of monies provided to, or on behalf of, the consumer in the consumer litigation funding. “Funded amount” excludes charges.
“Funding date” means the date on which the funded amount is transferred to the consumer by the consumer litigation funding company by personal delivery, wire, electronic means, or insured, certified, or registered United States mail.
“Immediate family member” means a parent; sibling; child by blood, adoption, or marriage; spouse; grandparent or grandchild.
“Legal claim” means a bona fide civil claim or cause of action.
“Resolution date” means the date the amount funded to the consumer, plus the agreed upon charges, are delivered to the consumer litigation funding company.
3. a. A consumer litigation funding shall meet the following requirements:
(1) the contract shall be completely filled in when presented to the consumer for signature;
(2) the contract shall contain, in bold and boxed type, a right of rescission, allowing the consumer to cancel the contract without penalty or further obligation if, within five business days after the funding date, the consumer either:
(a) returns to the consumer litigation funding company the full amount of the disbursed funds by delivering the company’s uncashed check to the company’s office in person; or
(b) mails, by insured, certified, or registered United States mail, to the address specified in the contract, a notice of cancellation and includes in that mailing a return of the full amount of disbursed funds in the form of the company’s uncashed check or a registered or certified check or money order; and
(3) the contract shall contain the initials of the consumer on each page.
b. The contract shall contain a written acknowledgment by the attorney retained by the consumer in the legal claim that attests to the following:
(1) to the best of the attorney’s knowledge, all the costs and charges relating to the consumer litigation funding have been disclosed to the consumer;
(2) the attorney is being paid on a contingency basis pursuant to a written fee agreement;
(3) all proceeds of the legal claim will be disbursed via either the trust account of the attorney or a settlement fund established to receive the proceeds of the legal claim on behalf of the consumer;
(4) the attorney is following the written instructions of the consumer with regard to the consumer litigation funding; and
(5) the attorney has not received a referral fee or other consideration from the consumer litigation funding company in connection with the consumer litigation funding, nor will the attorney receive that fee or other consideration in the future.
c. If the acknowledgment required in subsection b. of this section is not be completed by the attorney retained by the consumer in the legal claim, the contract shall be void. The contract will remain valid if the consumer terminates the initial attorney or retains a new attorney with respect to the legal claim.
4. A consumer litigation funding company shall not:
a. pay or offer to pay commissions, referral fees, or other forms of consideration to any attorney, law firm, medical provider, chiropractor, or physical therapist or any of their employees for referring a consumer to the company;
b. accept any commissions, referral fees, rebates, or other forms of consideration from an attorney, law firm, medical provider, chiropractor, or physical therapist or any of their employees;
c. intentionally advertise materially false or misleading information regarding its products or services;
d. refer, in furtherance of an initial legal funding, a customer or potential customer to a specific attorney, law firm, medical provider, chiropractor, or physical therapist or any of their employees; provided, however, if a customer needs legal representation, the company may refer the customer to a local or State bar association referral service;
e. fail to promptly supply a copy of the executed contract to the attorney for the consumer;
f. knowingly provide funding to a consumer who has previously assigned or sold a portion of the consumer’s right to proceeds from his or her legal claim without first making payment to or purchasing a prior unsatisfied consumer litigation funding company’s entire funded amount and contracted charges, unless a lesser amount is otherwise agreed to in writing by the consumer litigation funding companies, except that multiple companies may agree to contemporaneously provide funding to a consumer provided that the consumer and the consumer’s attorney consent to the arrangement in writing;
g. receive any right to or make any decisions with respect to the conduct of the underlying legal claim or any settlement or resolution thereof. The right to make those decisions shall remain solely with the consumer and the attorney in the legal claim;
h. knowingly pay or offer to pay for court costs, filing fees or attorneys fees either during or after the resolution of the legal claim, using funds from the consumer litigation funding transaction;
i. charge a fee in an amount greater than 40 percent of the funded amount in any 12-month period; or
j. charge any additional administrative, origination, underwriting or other fees, except for a onetime fee no greater than $500 for document preparation.
5. A consumer litigation funding company shall require the contracted amount to be paid to the company to be set as a predetermined amount based upon intervals of time from the funding date through the resolution date, and not be determined as a percentage of the recovery from the legal claim.
6. All consumer litigation funding contracts shall contain the disclosures specified in this section, which shall constitute material terms of the contract. Unless otherwise specified, the disclosures shall be typed in at least 12-point bold-type font and be placed clearly and conspicuously within the contract, as follows:
a. On the front page under appropriate headings, language specifying:
(1) the funded amount to be paid to the consumer by the consumer litigation funding company;
(2) an itemization of one time charges;
(3) the total amount to be assigned by the consumer to the company, including the funded amount and all charges; and
(4) a payment schedule to include the funded amount and charges, listing all dates and the amount due at the end of each 180 day period from the funding date, until the date the maximum amount due to the company by the consumer to satisfy the amount due pursuant to the contract.
b. Pursuant to the provisions set forth in paragraph 2 of subsection a. of section 3 of this act, within the body of the contract:
“Consumer’s Right to Cancellation: You may cancel this contract without penalty or further obligation within five business days after the funding date if you either:
(1) return to the consumer litigation funding company the full amount of the disbursed funds by delivering the company’s uncashed check to the company’s office in person; or
(2) mail, by insured, certified, or registered United States mail, to the company at the address specified in the contract, a notice of cancellation and include in the mailing a return of the full amount of disbursed funds in the form of the company’s uncashed check or a registered or certified check or money order.”
c. Within the body of the contract, a notification providing that the consumer litigation funding company shall have no role in deciding whether, when and how much the legal claim is settled for; however, the consumer and consumer’s attorney must notify the company of the outcome of the legal claim by settlement or adjudication prior to the resolution date. The company may seek updated information about the status of the legal claim but in no event shall the company interfere with the independent professional judgment of the attorney in the handling of the legal claim or any settlement thereof.
d. Within the body of the contract, in all capital letters in at least 12-point bold-type font contained within a box: “THE FUNDED AMOUNT AND AGREED UPON CHARGES SHALL BE PAID ONLY FROM THE PROCEEDS OF YOUR LEGAL CLAIM, AND SHALL BE PAID ONLY TO THE EXTENT THAT THERE ARE AVAILABLE PROCEEDS FROM YOUR LEGAL CLAIM. YOU WILL NOT OWE [INSERT NAME OF THE CIVIL
JUSTICE FUNDING COMPANY] ANYTHING IF THERE ARE NO PROCEEDS FROM YOUR LEGAL CLAIM, UNLESS YOU OR YOUR ATTORNEY HAVE VIOLATED ANY MATERIAL TERM OF THIS CONTRACT OR YOU HAVE COMMITTED FRAUD AGAINST THE CONSUMER LITIGATION FUNDING COMPANY.”
e. Located immediately above the place on the contract where the consumer’s signature is required, in 12-point font:
“Do not sign this contract before you read it completely or if it contains any blank spaces. You are entitled to a completely filled-in copy of the contract. Before you sign this contract, you should obtain the advice of an attorney. Depending on the circumstances, you may want to consult a tax, public or private benefits planning, or financial professional. You acknowledge that your attorney in the legal claim has provided no tax, public or private benefit planning, or financial advice regarding this transaction.”
7. a. Nothing in this act shall restrict the exercise of powers or the performance of the duties of the attorney general, which the attorney general is authorized to exercise or perform by law.
b. If a court of competent jurisdiction determines that a consumer litigation funding company has intentionally violated the provisions of this statute with regard to a specific consumer litigation funding, the consumer litigation funding company shall only be entitled to recover the funded amount provided to the consumer in that specific consumer litigation funding and shall not be entitled to any additional charges.
8. a. The contingent right to receive an amount of the potential proceeds of a legal claim is assignable by a consumer.
b. Nothing contained in this act shall be construed to cause any consumer litigation funding transaction conforming to this act to be deemed a loan or to be subject to any of the provisions governing loans contained in this code. A consumer litigation funding transaction that complies with this act is not subject to any other statutory or regulatory provisions governing loans or investment contracts. To the extent that this act conflicts with any other law, this act supersedes the other law for the purposes of regulating consumer litigation funding in New Jersey.
c. Only attorney’s liens related to the legal claim or Medicare or other statutory liens related to the legal claim shall take priority over any lien of the consumer litigation funding company. All other liens shall take priority by normal operation of law.
9. An attorney or law firm retained by the consumer in the legal claim shall not have a financial interest in the consumer litigation funding company offering consumer litigation funding to that consumer. Additionally, any attorney who has referred the consumer to his retained attorney shall not have a financial interest in the consumer litigation funding company offering consumer litigation funding to that consumer.
10. No communication between the consumer’s attorney in the legal claim and the consumer litigation funding company as it pertains to the consumer litigation funding shall limit, waive, or abrogate the scope or nature of any statutory or common-law privilege, including the work-product doctrine and the attorney-client privilege.
11. a. Unless a consumer litigation funding company has first registered with the Department of Banking and Insurance pursuant to this act, the company may not engage in the business of consumer litigation funding in this State.
b. An applicant’s registration must be filed in the manner prescribed by the commissioner and must contain the information the commissioner requires to make an evaluation of the character and fitness of the applicant company. The initial application must be accompanied by a $500 fee. A renewal registration must include a $200 fee. A registration must be renewed every 2 years and expires on September 30th.
c. A certificate of registration may not be issued unless the commissioner, upon investigation, finds that the character and fitness of the applicant company, and of the officers and directors thereof, warrant belief that the business will be operated honestly and fairly within the purposes of this act.
d. Every applicant shall, at the time of filing an application, file with the commissioner, if the commissioner so requires, a bond satisfactory to the commissioner in an amount not to exceed $50,000. In lieu of the bond at the option of the registrant, the registrant may post an irrevocable letter of credit. The terms of the bond must run concurrent with the period of time during which the registration will be in effect. The bond must provide that the registrant will faithfully conform to and abide by the provisions of this act and to all rules lawfully made by the administrator under this act and to any person or persons any and all amounts of money that may become due or owing to the State or to any person or persons from the registrant under and by virtue of this act during the period for which the bond is given.
e. Upon written request, the applicant is entitled to a hearing on the question of the applicant’s qualifications for a registration if:
(1) The commissioner has notified the applicant in writing that the application has been denied, or
(2) The commissioner has not issued a registration within 60 days after the application for the registration was filed. A request for a hearing may not be made more than 15 days after the commissioner has mailed a written notice to the applicant that the application has been denied and stating in substance the commissioner’s findings supporting denial of the application.
f. Notwithstanding the prior approval requirement of subsection a. of this section, a consumer litigation funding company that registered with the commissioner between the effective date of this act and six months thereafter may engage in consumer litigation funding while the company’s registration is waiting approval by commissioner. All funding agreements prior to the effective date of this act are not subject to the terms of this act.
g. No consumer litigation funding company may use any form of consumer litigation funding contract in this State unless it has been filed with the commissioner in accordance with the filing procedures set forth by the commissioner.
12. This act shall take effect on the 90th day next following enactment. Nothing in this act shall in any way affect or invalidate any consumer litigation funding effectuated prior to the effective date of this act.
“Consumer Litigation Funding Model Act.”
A new type of funding Lawsuit Funding Solutions is offering is surgical funding. LFS now provides surgery lawsuit funding advances allowing plaintiffs to get the medical care they need even if they do not have the insurance or funds to pay for a necessary surgery. As is the case with other lawsuit advances, surgery financing is paid back only at the end of the case, and only if the case is successful. If the case is unsuccessful, he or she owes LFS absolutely nothing.
Call us today at 215.599.6545 if you are interested or have any questions.
Here is a quick case study when lawsuit funding can be used in an effective way for a plaintiff:
Chucky Brown is in a motor vehicle accident. He is rear ended by a reckless driver who was texting. Chucky has numerous injuries, including back and neck injuries that will force him to miss months of work leading to an economic loss and family hardship. The bills begin to mount up but Chucky believes his lawsuit against the driver will pay for all of his overdue bills. And they will, but when? It can take months or even years before his case is settled or reaches a judgment. But what about now? The insurance companies and defense attorneys know that Chucky needs money now and the longer a case goes the more burden it puts on Chucky’s life. That is why insurance companies will often offer settlements at 20% of what the case is worth because they know that plaintiffs like Chucky are in desperation mode and will accept it. This is when it is time for Chucky to call a lawsuit funding company. Lawsuit funding companies allow you to hang in there and get the settlement or judgment you deserve. Chucky shouldn’t have to settle and accept an offer because he is in financial distress. A lawsuit funding company will give Chucky the money he needs to pay off his existing bills and help him get to the finish line of his case. Chucky decides to seek a cash advance of $2,000. He pays off his existing bills and has $500 left over to help pay bills over the next few months. He is relieved and can finally stop worrying about when the case will settle or when the judgment will occur. Six months later Chucky wins a settlement of $50,000. The insurance company was offering Joe $10,000 just six months ago. If he hadn’t gotten a lawsuit cash advance and had accepted the low ball offer, he would have lost out on $40,000 of case proceeds. Once Chucky receives his $50,000 settlement, he repays the $2,000 advance plus interest. If Chucky had lost his case, he would not have owed the lawsuit funding company anything.
Call us today at 215.599.6545 to see if Lawsuit Funding Solutions can help you.
Is a Lawsuit Cash Advance Right for You?
Picture this: you’re driving to a business meeting, when a pickup truck comes flying out of a side street and rams right into the side of your car. Not only is your car wrecked and your meeting cancelled, but you suffer injuries to your legs, back and neck, as well as cuts and bruises in various places.
In fact, you hurt your back and neck so badly in the accident that you have to take several months off from your job to recover. You eventually go back to work, but only part-time, as that is all you can handle. Even though you have medical insurance, you have to take thousands of dollars out of your savings to help pay for your doctor’s bills, medication and physiotherapy.
Your insurance company verifies that the collision was clearly the other driver’s fault since medical tests showed that he had been drinking. Given that you’re losing a lot of money, both because of your medical expenses and because you’re no longer receiving your full salary, you decide to sue the drunk driver who hit your vehicle.
Your attorney is confident that you’ll win substantial damages, but the case has been dragging on for over a year now. Meanwhile, your savings are running low, but the bills just keep coming in. So a friend suggests that you apply for a pre-settlement lawsuit loan to help tide you over. Would this kind of financing – also known as a lawsuit cash advance – be suitable for you?
How to determine whether to get a lawsuit cash advance
As in the example above, if you are suing someone because you were injured in a motor vehicle crash, in a construction or workplace accident, or in a similar situation, you might be eligible for a cash advance. Legal cases often take several years to resolve, but life has to go on – and be paid for – while you’re waiting. Many plaintiffs in this type of case don’t have an adequate income stream, especially where serious injuries or wrongful death are involved.
There are two basic questions you should ask yourself:
Do you qualify for lawsuit funding?
Do you need the money?
You can easily get the first question answered by applying for a pre-settlement cash advance. It doesn’t cost anything to submit an application, and you’ll get your approval or rejection decision quickly. If you have a solid case that the cash advance provider believes you have a very good chance of winning, it will approve your request for a loan.
Assuming that you are eligible for lawsuit advance financing, you’ll need to consider the second question – do you need the money? – carefully before you actually take out an advance. Although this is not really a loan in the traditional sense, since you don’t have to make any repayments until you have been awarded your legal settlement, you will be charged interest and fees on the advance money when you pay it back. However, you’ll only pay interest on the first two years of your cash advance, no matter how long it takes for your legal case to close.
Even so, you must always remember that you will have to use a portion of your award payout to cover interest and fees, depending on the duration of your lawsuit loan. If you’re fortunate enough to be able to carry on working as before, or if you have plenty of cash in the bank, you might not need to borrow any additional money.
But if, like so many people who have been injured in accidents that other people were responsible for, you’re now having trouble making ends meet, lawsuit funding could be a godsend. It would allow you to pay your medical bills and keep your family housed and fed until you receive the cash you’re suing for. If that’s the situation you’re in, you should go ahead and apply for a lawsuit loan.
There’s no need to accept the insurance company’s offer to settle out of court for a small percentage of what you could get in a legal judgment, just because you’re in a financial bind right now. Lawsuit funding gives you the freedom to wait for your court settlement to come through, so you usually benefit from the highest possible payout.
In the event that you end up losing your case, you won’t need to pay back a single penny – the cash is yours to keep. So, with a lawsuit cash advance, you win either way!
Pros of Lawsuit Funding:
1. Raise the Value of a Case – Lawsuit funding allows clients to get the full value settlement or judgment that they deserve instead of accepting a low-ball offer from the insurance carrier.
2. Lawsuit Funding advances money to pay the rent, put food on the table, pay medical bills, and pay daily expenses while a client waits for their case to end.
3. Non-recourse – there is no risk in getting this money. If a client loses their case, they owe absolutely nothing back to the lawsuit funding company.
4. Allows a Client to “Sleep at Night” – Clients can get anxious for their case to settle. By getting an advance, the client is put more at ease while they wait for the case to end.
5. No monthly payments – unlike a regular loan, a lawsuit cash advance is paid at the end along with the total proceeds from a successful case.
Call us Today if you have any further questions.
A lot of attorneys take a hands-off approach when it comes to lawsuit funding. Attorneys will tell the clients they are basically on their own if they want to go out there and get a cash advance from a funding company. This could be a huge mistake. A client may choose a lawsuit company that charges outrageous amounts of interest and fees leading to a difficulty in settling a case due to the fact there is such a large lien on the case from a lawsuit funding company.
Below are the 4 steps an attorney should take when a client is looking for a cash advance:
1. Explain the positives and negatives of receiving a lawsuit funding advance. Make sure you show the client exactly what they will owe at the end of 12, 24, and 36 months.
2. Do not allow a lawsuit funding company to ever influence your decision-making in a case.
3. Try and steer your client to a reputable funding company that offers the best and fairest pricing. Remember, most state laws allow an attorney to get involved in the selection of the funding company.
4. Finally, make sure an attorney finds out what the client is using the money for. This money should be used for rent, heat, etc. Do not allow your client to use this money to buy a new TV.
Call us today with any questions.
An attorney is working on a personal injury case and receives an offer of $20,000 from the insurance company. The attorney feels that the offer is about 20% of what the true value of the case is actually worth – i.e. $100,000 – but has an obligation to report the offer to his/her client. The client wants to take the $20,000 offer and does not care if the case is worth $100,000. The client needs the money now and cannot wait another 6-12 months for the case to settle. They are now 3 months behind on their rent and a $20,000 settlement is looking great for their current needs.
What if the client take out a $5,000 from a Lawsuit Funding Company. Below is the Math on how much more a plaintiff would get from using a lawsuit funding company:
Quick Math with a 60/40 Split:
$12,000 to Client
$8,000 to Attorney
$53,000 to Client
$5,000 Advance from Lawsuit Funding Company
$40,000 to Attorney
$2,000 to Lawsuit Funding Company
As you can see, a 5K advance could turn into an extra $31,000 to a plaintiff. Call us today and we can walk you through the process.
Attorneys get the same question from their clients – can I borrow money from you while I wait for my settlement? The Answer is NO.
Per the Rules of Professional Conduct – attorneys in the state of PA are ethically prohibited from lending monies to their clients. The rationale behind this is the Ethics Board does not want an attorney to have a conflict of interest when it comes to settling their client’s cases.
For instance, if an attorney has given a client $5,000, and there is a decent offer on the table but not one that the attorney deems worthy of the case’s value, an attorney may take that offer due to the fact they already have $5,000 of their own money in the case.
The lawsuit funding world really got going about 15 years ago. A few companies popped up and starting funding pre-settlement cases all over the country focusing on MVA and Med Mal Cases. But, if you look below, you can see where the idea sprouted up in the State of Pennsylvania.
Per the PA Supreme Court over 50 years ago:
The person who has, without fault on his part, been injured and who, because of his injury, is unable to work, and has a large family to support, and has not money to engage a lawyer, would be at the mercy of the person who disabled him because, being in a superior economic position, the injuring person could force on his victim, desperately in need of money to keep the candle of life burning in himself and his despondent ones, a wholly unconscionably meager sum in settlement, or even refuse to pay him anything at all. Any society, and especially a democratic one, worthy of respect in the spectrum of civilization, would never tolerate such a victimization of the weak by the mighty.
Richette vs. Solomon