Why Nobody in Our
Industry Funds Cases
Involving Minors
Please read
carefully: This
is a special note addressing why the lawsuit funding industry as a whole
(including our company) does not fund cases that involve minors.
If you have a lawsuit
involving a minor and you are seeking funding on the case, you likely have been
declined for funding and do not understand why.
We will try to explain why here.
For the most part, minors
are those who are under the age of 18 years.
And, legally speaking, minors are not able to enter into binding written
contracts. That is one of the legal
characteristics defining a minor.
Therefore, if we were to approve a lawsuit for funding where the
plaintiff was a minor, that contract would NOT be legally binding. So for example, if the minor broke the signed
contract with us and refused to pay-us back, there would nothing we could do about
it, because minors are not legally able to enter into binding contracts. So any contract agreed to, would not be
legally binding. Therefore any such
contract would be worthless. This is why
for example, minors cannot purchase real estate, because they cannot enter into
meaningful contracts. So for this
reason, companies within our industry will not invest into cases where the injured
party (plaintiff) is a minor. Why? Because minors are not legally able to enter
binding contracts.
And
the main argument to
the above point that parents of minors often bring up, is the
following: parents often will say to us, “as parents of
the injured child, we understand that our child is not legally able to
enter
any binding agreements, but that’s OK, because as the parents, we
are also
named as plaintiffs in the lawsuit, that is, we the parents are named
in the
lawsuit as plaintiffs, in addition to our injured child, so you can
just
advance us money based on us and not our child.”
And while this if often
the situation in these types of lawsuits, we still CANNOT fund the parents. The
reason being: when these types of cases
go to trial, the child will often be awarded a significant judgment but the
parent’s claims are often not awarded a judgment at all or their judgment is
very small in comparison to what is awarded the child. Therefore, investing into the parent’s
claims is just way too risky for us the investor.
Additionally, to make
matter even more complicated, even if the parent was to be awarded a
significant judgment amount, the court almost always restricts the parent in
how they can use the judgment proceeds.
That is, the court will often restrict the judgment proceeds to be used
only for the benefit of the child. Such
as paying for college, food, clothes, etc. And such a restriction for us the investor,
is a deal killer for us, because it makes investing into the case too risky.
There is potentially one
way around this issue. And this is to
have a probate / family court judge approve the details of any prospective
funding agreement (contract) between the parents and us. So if a judge approves our funding agreement,
such that we feel comfortable that we will be paid back when the case wins, we
can in theory fund cases involving minors.
But in reality, this
almost never happens for several reasons.
First, for this to occur, your attorney would have to prepare a motion to
present to the judge. Your attorney
would charge you extra fees for doing this and your attorney will rarely agree
to do this. Secondly, this adds
considerable time to the funding process, typically between 30 and 90 days
(time to prepare the documents, and time to be heard in front of the judge). And this possible solution does involve risk
as well, because there is no guarantee the judge will approve the funding
agreement. So it’s possible to jump
through these extra hurdles just to have the motion denied by the judge.
Note: Adults with severe mental limitations are
often regarded in a similar fashion as minors.
That is, if your case involves an adult who is mentally retarded, we
often cannot fund such cases, for the same reasons we cannot fund cases
involving minors.
But, emancipated minors, CAN legally enter into binding written
contracts and we CAN potentially
fund a case, where the minor has been emancipated. An emancipated minor is a minor who has the
legal rights of an adult, typically through approval of a court or if the minor
was married and divorced before age 18.
Also, if an incident
occurred while the plaintiff was a minor, but now the plaintiff is an adult, we
can and often do fund such cases. For
example, we just funded a case where the plaintiff was assaulted in shop class
in high school but is now an adult.
In any event, if you have
a case that involves a minor, we and everyone else within our industry likely
cannot help you and we are sorry for that.
Please contact us with any further questions.
|
