|
|
|
|
Month |
Amount Owed to You |
|
|
1 |
$ 6,179.40 |
|
|
6 |
$ 7,160.14 |
|
|
12 |
$ 8,544.60 |
|
|
18 |
$ 10,196.76 |
|
|
24 |
$ 12,168.38 |
So in this
example, if the case settles and pays-out around the 12 month time-frame, you
would receive $8,544.60, which means your profit would be $2,794.60 on an
investment of $5,750, which is a 48.6% rate of return on your money in one year!
That’s obviously a great rate of return
and is very common within our industry.
We’ve originated
100’s of lawsuit advances over the years, so we have a great pool of funding
agreements and contracts, you are welcome to use in structuring any potential
investment you are considering. And if
you’ve ever helped one of your clients with an advance, you likely have a copy
of those funding agreements as well that could review both in terms of how
money can be made and with overall mechanics of the transaction.
How Much Capital is
Required?
The amount of
capital required to invest into a case, is completely up to you. And in general, it would depend upon the
valuation of the case in question. For
example, for small soft tissue personal injury cases, we often invest as little
as $350. And on large motor vehicle
related wrongful death cases, we often invest around $50,000. How much you invest into a case depends
solely on what the case in question can support. Some cases are big and some are small.
How much you
offer to invest into a case can also depend upon which underwriting method you
choose to use. See more on this below
regarding underwriting models.
Also, see our
notes about funding ratios further on down this page below.
What’s in it for Us?
As the broker,
we earn an origination fee for any plaintiff that get’s funded. The industry average origination fee is 15%
and the typical range is from 10% to 20%.
Underwriting Models
Essentially
there are four models for deciding if a case is worth investing into. And in order of preference these are:
|
|
1. |
The Under-Cut |
|
|
2. |
Settled Case Model |
|
|
3. |
Small Funding Model |
|
|
4. |
Traditional Model |
The Under-Cut Model:
This one is my
favorite. Here’s how this works: When a plaintiff initially applies for
funding with us, we always tell them to let us know if they receive a funding
offer from any of our competitors. If
they do, we’ll try to beat that offer.
We ask the
plaintiff to fax in or email us a copy of the competing funding offer. (We need to verify that they have a real
funding offer on the table.) And we then
simply sweeten the offer, so the plaintiff goes with us versus our
competitor. For example, maybe we will
offer a bit more money, lower rate, reduce the origination fee a bit, or waive
the application fee, etc. We only
sweeten the deal just enough, that the plaintiff will accept our funding offer.
This model is my
favorite, because it’s so fast and cost effective for us. We will not spend any time (or money) doing
the hard due-diligence of a traditional underwriting. We simply rely upon the underwriting work of
the competing offer. If the competing
offer is from a bona-fide professional institutional investor, we can feel
comfortable that they have already done all the tough due-diligence work on
reviewing the case. Or else, they would
not have bothered with issuing a written funding offer to the plaintiff.
So we just
review the competing offer, sweeten the deal, and walk away with the
investment.
Before we
implemented this model, we were losing at least one good deal a month, because
the plaintiff had applied for funding with our competitors before applying with
us. So by the time we approved them,
they had already been funded, which effectively killed the deal and wasted our
time. But now we are using those
competing offers to our advantage and so can you!
Settled Case Model:
With this
underwriting model, we are simply investing into cases that reached a
settlement, but have yet to pay-out.
This method then obviously only applies to settled cases. And for the most part, these cases are often
class action, either pharmaceutical related like a Vioxx claim or employment
related for something like unpaid overtime wages.
In any event,
because we are investing into a settled case, the risk is relatively low, which
is why we often only charge 2.5% on settled cases (compounded monthly).
For example, I personally
funded a gal $5,000 on a settled pharmaceutical fen-phen case. When her settlement proceeds were disbursed,
I was paid $8,000. So on my $5,000 that
I invested, I made $3,000. In this
example, this took just under 9 months to receive my investment back. That’s a 60% return on my investment in less
than a year!
Small Funding Model:
Another model I
often personally use, is to invest
just a few hundred dollars (say $350) into strong liability, soft-tissue motor
vehicle accidents. Statistically, a
majority of these cases will settle for under $10,000. These are good cases in the since that they
have strong liability, but they are small because the injuries are often
relatively minor. Or maybe the defendant’s
insurance policy limits are small. In
any event, because we are only investing say $500 or $350, there is still plenty
of settlement money to pay us back, even if the case only settles for $5,000 or
so. We are still about doubling our investment
with each of these small settlements.
Traditional Model:
The traditional
model of reviewing a case for funding consideration can be applied to any
case. And this is the model we use if we
cannot use one of the three above models.
In this model,
we are going through a detailed review of the case, to determine if the case
can support an investment. Essentially
as the investor, here’s what you’re looking for:
|
|
1. |
Compelling liability |
|
|
2. |
Defendant’s ability to pay and |
|
|
3. |
Documented damages |
So you are
basically looking for the same qualities you want when contemplating taking on
a new case/client.
For example, when reviewing a motor vehicle
accident, here’s the key documents we would request from the plaintiff’s
attorney and why:
| 1. |
Police Traffic Accident Report: We can often use this to document the liability, particularly if the defendant was the one ticketed. |
|
|
|
||
|
|
2. |
Applicable Insurance Dec Sheets: We want to know how much insurance is out there to go after. The insurance policy limits, set the theoretical limit of what the case could be worth. |
|
|
3. |
Relevant Medical Records: This obviously documents the damages. Did the plaintiff have surgery? Was the injury tied to the accident? Did the plaintiff go to the ER? Are there any pre-existing conditions? |
So when you are
doing a full review of a case, no matter what the case type is, you’ll be
looking at answering those three key questions, 1. is there compelling
liability, 2. does the defendant have the ability to pay, and 3. are there
documented damages? If you can obtain satisfactory
answers to those three questions, you’ll know if the case is good or not.
Other Considerations –
Funding Ratios
In general,
avoid funding a plaintiff too much money.
We try not to invest more than 10% to 15% of what a case is
conservatively valued at. Why? Several reasons:
|
|
1. |
You need to keep the client vested into the successful outcome of the case. Give a client too much money and they will no longer care about who wins or loses, which could hurt your investment. |
|
|
2. |
You need to allow room for your investment to grow |
|
|
3. |
You need to leave room for plaintiff attorney fees and any unforeseen liens, like medical liens. |
Possible Deal Killers
While we do not
check credit or care about a plaintiff’s employment, we do need to account for
the possibility of liens which could take priority over ours. These include the following situations:
|
|
1. |
IRS or state tax liens |
|
|
2. |
An open bankruptcy |
|
|
3. |
Child support liens |
|
|
4. |
Medical liens, including Medicare/Medicaid |
|
|
5. |
Worker Comp liens |
|
|
6. |
Prior lawsuit advance liens |
A plaintiff
could in theory have all the above liens on a case and the case could still be
a good case to invest into. It just
depends upon how big the case is and how big the liens are.
In the vast
majority of cases we fund, these possible liens are not an issue, but it is
good underwriting practice to always rule these issues out. Discussing liens with the plaintiff’s attorney
and running a simple background check are how we routinely handle these
potential pitfalls.
Why Choose Us?
Well most
importantly, we are likely the only lawsuit advance brokerage to ever offer
this type of investment opportunity to you!
Additionally, we are the #1
funding source in the nation and that’s saying a lot considering all the
competition out there!
And being #1 is
a big deal, especially because we’re basically just a husband and wife team
with a few employees. So we are small
enough to provide you with personal treatment.
Unlike some of our competitors, you’re not going to get routed through
endless call centers when you contact us.
Yet we are big enough and experienced enough to quickly fund plaintiffs. If we cannot get a plaintiff funded, no one
can.
What does being the #1 broker mean? The truth is in our numbers (here’s some
‘Stats’ from last year):
We approved 243
cases for funding last year. On average,
we approve 4 to 5 cases a week.
And here’s how
those approvals were distributed: 76 motor vehicle accidents, 25 premises
negligence cases, 45 pharmaceutical and medical device cases, 31 employment
cases, 22 worker comp claims, 13 medical malpractice cases, and the balance was
a mixture of other cases (divorce, dog bite, breach of contract, commercial,
etc).
In total, last
year we funded $1,213,659 to clients. That’s over $100,000 a month in fundings. That means, these cases in total, were valued
at over $12 million.
On average we
funded about $6,000 per case.
The minimum we
funded was $350 on small soft tissue cases.
The maximum we funded
was around $50,000 on several cases, one a medical malpractice, one a wrongful
death case, and another on an interpleader case.
And in terms of
funding cases, here’s what we can do:
|
1. |
We Save Attorney’s Time! Lawsuit Advances are a distraction to attorneys! Stop wasting time sending out case docs to various funders. We work with well over a dozen large institutional investors and many more small investors. We know which cases go where. So send out the case docs just once to us and we’ll take care of the rest. |
|
|
|
|
2. |
One Application = Multiple Offers. One application and the plaintiff can often get multiple funding offers. Because we are both a direct funder and a broker, we can shop our industry hard to provide a plaintiff with multiple offers, allowing the plaintiff to pick the most competitive pricing. So not only will we save the attorney time, but in return the plaintiff can get the best pricing. |
|
|
|
|
3. |
Huge Funding Range. As low as $250 per case, with no real maximum. The majority of our fundings are in the $2,000 to $10,000 range. How much we can fund only depends upon the value of the case. And, very importantly, we will never fund a plaintiff too much, because we do not want the plaintiff, to lose interest in the case! Typically we will advance 10% of the case value. |
|
|
|
|
4. |
Guaranteed Lowest Rates. Again, made possible because we are both a direct funder and a broker, we guarantee the lowest fees. |
|
|
|
|
5. |
Fast Approvals. Often same business day (assuming the attorney’s office can provide us with a relatively complete case file or demand package) |
|
|
|
|
6. |
Simple Hassle Free Application. Can be completed by the client, attorney, or attorney’s staff. And the attorney’s staff can fax us the supporting case docs, again saving the attorney time. |
|
|
|
|
7. |
Never Any Up Front Fees or Charges. All cases that we review for funding consideration are done so free of any charges. Fees are only applicable if the plaintiff is approved and accepts our money. |
|
|
|
|
8. |
Never Any Interference. Never any interference on how an attorney litigates their cases or runs their firm. |
|
|
|
In Summary…What I’m
asking you to do
If you are
interested in investing into lawsuits or simply curious how this works from the
investor perspective, contact us for more details.
We are always
looking to add investors to our resource pool.
As an attorney, you are perfectly qualified to review cases you may have
an interest in investing into.
Maybe you only
want to invest into one or two cases a year?
Or maybe you want to invest into one case a month. It’s completely up to you.
If you are
interested in this…let us know what type of cases you are interested in and
what criteria you have.
Additionally, browse
the rest of our website, www.Get-Lawsuit-Loan.com,
for we have a ton of info regarding lawsuit funding, including fee and pricing
info.
We are looking
forward to mutually beneficial relationship with you.
Sincerely,
Eric A. Kelly, Lawsuit Loan Specialist
Get-Lawsuit-Loan.com & EZLawsuitFunding.com
858-414-3512 Direct
858-244-4977 Fax
PS – If you ever
have a client in need of a lawsuit advance, we welcome your referrals. Learn more about our referral program click here.
PSS - If you are interested in funding to yourself or your law-firm, click here.
