In the last post, we discussed how the lawsuit funding process works, why attorney cooperation is vital to the process and got our first glimpse into a proven strategy that will serve to minimize the amount of time attorneys have to spend on the lawsuit funding process.
In this installment, we discuss the flexibility lawsuit funding affords and how this flexibility presents a unique opportunity for attorneys when dealing with this aspect of their practice.
Regulation in the Business
Lawsuit funding is an unregulated marketplace where investors purchase a portion of the future proceeds of a case in return for immediate cash. While some may be scared of an unregulated market – this feeling undoubtedly encouraged by the media and government which want to regulate and control everything under the sun – most business owners understand that an unregulated market offers flexibility that would otherwise not be available if contractual language, pricing, and delivery systems were mandated through regulatory efforts. This very flexibility affords a unique situation for attorneys and lawsuit funding companies.
Imagine a regulated lawsuit funding industry where “committees” decide not only what fees can be charged to a client but also the amount of paperwork that must be collected in order for a case to be fundable. If you are having difficulty imagining this, simply ask one of your friends in the mortgage business how much more fun the business has become after the credit scare in 2008 when thousands of new regulations were pushed onto the backs of those originating mortgages.
Simply put, an unregulated lawsuit funding industry means that deals can flow quickly and easily, leaving the attorney and staff more time to focus on the tasks that actually generate revenue for the firm. Regulating the lawsuit funding market would make the process more arduous and leave attorneys spending more of their valuable time on non-revenue creating tasks.
Flexibility Creates Opportunity
Lawsuit funding relies on processing limited information in order to assess risk. Funding the personal injury case, which comprises more than 90% of most lawsuit funding portfolios, consists of gathering documentation regarding liability (e.g., police reports, witness statements, photographs, etc.), available insurance coverage and medical records. We call these documents “The Big 3” because they represent the 3 elements of a negligence case (i.e., liability, coverage and damages). Without any of “The Big 3” the case is in serious jeopardy and any attempt to secure lawsuit funding would be met with substantial resistance.
Sometimes however, all of the elements of a successful negligence case are present but supporting documentation is not yet available. The reason could simply be the required documents do not exist or it could be your firm’s policy is to wait until a later time before all of the documents (e.g. medical records, operative reports) are requested. For whatever reason, the lack of documents would pose a significant obstacle in a regulated lawsuit funding industry.
Yet, as we mentioned, lawsuit funding is unregulated. That means, that individual funding enterprises are free to decide for themselves what documents are required. This flexibility allows funding companies to figure out a way to get the deal done. Indeed, this happens every day. Often times, a case is funded simply through a comfortable conversation between the attorney and an underwriter.
The Availability of Perks
To be sure, not every funding applicant is afforded the same treatment and many applicants are denied funding because required documents are not available. To secure the benefits of the flexible aspects of the lawsuit funding, attorneys can use many different approaches. One approach however, can greatly increase the attorney’s success rate in this endeavor.
In the next installment, we will discuss this approach and illustrate step by step exactly how to do this. Please stay tuned for our next installment or click here to sign up for our newsletter which includes case studies, new promotions, and other news.
Thank you for your interest in the lawsuit funding business.