The Legal Examiner Mark The Legal Examiner Mark The Legal Examiner Mark search twitter facebook feed linkedin instagram google-plus avvo phone envelope checkmark mail-reply spinner error close
Skip to main content

Recently, in Part I of this post, we reported on the Chicago Tribunes’s negative "kill the bill" editorial about legislation designed to regulate lawsuit funding in Illinois. On the heels of the Tribune’s unsubstantiated and unbalanced report, comes New York Times article entitled, “Lawsuit Loans Add New Risks for the Injured.” The article is incredibly one-sided, beginning with its title. The industry is the “lawsuit funding industry; it is not the “lawsuit loan” industry. Lawsuit funding is the practice of placing money in the hands of someone who you don’t know, who has a personal injury case being handled by an attorney who you may or may not be familiar with, collateralized only by incomplete lawsuit documentation that can be presented in a light favorable to funding, but may not necessarily be an accurate portrayal of settlement or verdict likelihood, with no sure time table for repayment. And, then, the lawsuit funding company excuses the whole thing if the case fails. Is it really that surprising that such a service trends to the expensive side? Ask any banker if the process I just described qualifies as a "loan", which, by definition, requires "an absolute obligation to repay".

Lawsuit funding is provided solely on the possibility that, first, a pending lawsuit will be successful and, second, that it will be successful enough to repay the funding principal and proposed profit. If the lawsuit is unsuccessful, the advance, in its entirety, is excused. Litigation results are often compromised; if compromised results are achieved, lawsuit funding results will, likely, be compromised as well. The process is much more akin to the commodity options trading industry than it is to the lending industry. Investments are placed in “litigation futures” and if these futures increase in value over a particular period of time, the investor wins. If they decrease in value or fail, the investor can, and often does, lose money, sometimes, all of it. There must be a successful verdict or settlement for the lawsuit fundingcompany to profit and the lawsuit must achieve a targeted result for full profit. If the plaintiff does not win his/her case, he/she does not repay the cash advance. The lawsuit funding company relinquishes its entire cash advance if the plaintiff is not successful in his/her lawsuit.

As I indicated, the Times presents a one-sided story; its facts are inaccurate, its presumptions are based on these inaccuracies. I was interviewed for the New York Times piece; I said much of what I have said here. The Times chose not to include it. Why? Because the author wanted to write a negative piece and my comments must have been considered “too positive”? Without trial lawyers, working hard to hold insurance companies and other corporate Goliaths accountable, without lawsuit funding companies available to help plaintiffs when they need financial assistance, these greedy companies will take advantage of the weakest members of our society, the injured and disabled. If an insurance company avoids personal responsibility for an event that premiums are supposed to insure, the burden of support for the injured and disabled shifts, from the private sector to the taxpayer. Yes, dear reader, that means you and I will pay to support these people with public assistance, Medicaid and Medicare. Why should the taxpayer be responsible? Why shouldn’t the insurance company that received the premium and accepted the risk bear the burden? The public should be outraged, but it has been surprisingly quiet.

For the past 12 years, my company, Lawsuit Financial Corporation, has been provider of the “lawsuit funding” service that the Tribune and Times call a “risky business”. It is, indeed, a risky business. The NY Times chose to ignore the risk and criticize what it assumes (with very limited evidence) are the profits. Obscene profit is certainly an appropriate subject for criticism, but the Times and the Tribune are on the wrong side of this story. And, there is an important story to be told here.

It is a story of obscene corporate profits and power used to crush a weaker opponent. It is a story of corporate might and greed wielding political power to enhance an already enhanced position. The root of any “lawsuit crisis” is grounded in corporate greed. It is the insurance companies that force lawsuits; it is the insurance companies that prolong them. It is the insurance companies that clog court dockets and force litigants to seek financial assistance. Ultimately, cases are tried against weary plaintiffs; often the insurance companies flex their muscles and outspend and outlast the plaintiff. Litigation is risky and expensive; lawsuit funding is even more risky because the funding company does not have direct knowledge of the case.

The Times and Tribune articles fail to address corporate power and lawsuit funding risk. Corporate power is used to delay and deny justice. In the lawsuit funding business, if justice is delayed, money is at risk. If justice is denied, money is conceded. If there is no justice for a plaintiff, there is none for a lawsuit funding company. Corporate defendants and insurance companies routinely invest huge resources to pursue frivolous defenses against financially distraught, disabled, injury victims. Yet, no article is written; no outrage is expressed. When victims fight back with private investment dollars, suddenly, that is a story? Without the advent of the contingency fee and, recently, lawsuit funding, it would be prohibitively expensive for the general public to sue deep pocketed companies in order to force them do what they should have been doing all along.

Most lawsuit funding companies seek to invest in mature, already commenced, litigation. The main purpose is to provide a seriously injured or disabled plaintiff with needed cash infusions to allow him/her, merely, to survive the lawsuit. Funding is usually provided in small increments and invested against small portions of the pending litigation. Contrary to the Tribune’s absurd assertion, the vast majority of lawsuit funding companies rarely, if ever, provide “seed money” to plaintiff lawyers to file speculative litigation. Lawsuit funding does not and will not “spawn lawsuits galore” as the Tribune speculates. The notion that cases are brought “only because ‘lenders’ see the potential for a pay-off” is patently false. The statement that litigation funding companies will, in significant numbers, require that the plaintiff hand over “their entire proceeds from a settlement to cover the “loans” they received when their cases started” is simply ludicrous.

I cannot speak for all litigation funding companies; consumers must do their homework, much like they do when looking for an attorney or checking out insurance companies and rates. A reputable lawsuit funding company will clearly explain all contractual terms and obligations, in plain language, prior to execution of a contract. This includes a price schedule, with copies of all documents and schedules provided to the plaintiff and his/her attorney.

The Tribune and Times have done zero research in justifying its stance in opposition to "lawsuit loans” (including improper labeling of the industry); they fail to quote those who offered positive remarks, present innuendo and half-truth, quote industry professionals out of context, and mischaracterize the transactions they feature. The Tribune and the Times fail to consider both sides of this issue and, especially, fail to consider the financial motives of those who condemn the practice. Lawsuit funding is a valuable service for the right person, in the right case, at the right time. It can make a huge difference in the outcome of the litigation it supports. It combats the common practice of insurance companies using their money and power to engage in frivolous defenses designed to delay proceedings, deny recoveries, and make plaintiffs desperate to settle for less than full value.

Since the average citizen has probably not been injured or disabled in a life-changing accident, he/she may be buying into this “lawsuit abuse” nonsense. But, my fellow citizens, it can happen to you. And, when it does, the insurance company will try to crush you. It will use your physical restrictions and inability to earn a living against you. It will try to delay the proceeding and deny you justice in an attempt to make you desperate to settle. You will be glad you have a competent lawyer by your side. And, if you need a little financial assistance to stay the course, rather than settling your valuable case for pennies on the dollar, I hope you will ignore the rhetoric and seek assistance from a responsible provider of lawsuit funding services.

Mark Bello has thirty-three years experience as a trial lawyer and twelve years as an underwriter and situational analyst in the lawsuit funding industry. He is the owner and founder of Lawsuit Financial Corporation which helps provide legal finance cash flow solutions and consulting when necessities of life litigation funding is needed by a personal injury plaintiff. Bello is a Justice Pac member of the American Association for Justice, Sustaining and Justice Pac member of the Michigan Association for Justice, Business Associate of the Florida, Tennessee, and Colorado Associations for Justice, a member of the American Bar Association, the State Bar of Michigan and the Injury Board.


  1. Gravatar for The Legal Finance Journal
    The Legal Finance Journal

    Thank you for a balanced view on this subject -- it's rare to see a view that doesn't simply present one side.

  2. Gravatar for LawLeaf

    A journalist should convey a non-bias opinion and cite the facts on both sides. A true journalistic approach should always be presenting the facts and allow the readers to make up their own minds. The New York Times really dropped the ball in the article. You are one of the pioneers in the litigation financing arena and for them not to include your opinion in the article is a travesty. I thought your article here was very insightful and it truly sheds a light on the real value of litigation financing.

  3. Gravatar for Theresa

    Reading your article was like I was looking in a mirror as you read my thoughts. I am an injury victim, on disability and after 18 months of wasted paperwork,denials,motions,and doctor IME appts.I am exhausted, disheartened and broke. I apply to a funding comapany only to have my own lawyer say "I must not know how to do math". Insisting the company would take me to the cleaners and I should not be so confident that "I will even win my case". After exhausting all my credit cards that charge 25 - 29% interest a month, do I really feel the funding company is any more expensive. My own lawyer will receive 33% of my lawsuit. He should do the math.I feel the lawyers, and the insurance companies work hard to keep a suit from settling to ensure their jobs and justify the outrageous charges they themselves charge. I have lost faith in the justice system and even more in my lawyer. Thank you for saying How I Feel so polietly, my words would have been a lot less acceptable. I feel "we" are outraged, but unable to fight such a system. Goliath as you say will try to "crush Me" but I will continue to stay strong.

Comments are closed.

Of Interest