The previous post outlined why consumer legal funding does not increase the number of cases filed. By that same token, consumer legal funding does not increase the costs of litigation and to suggest otherwise is misleading at best. The truth of the matter is that the existence of consumer legal funding allows plaintiffs who are facing dire financial circumstances to get the settlement that they are entitled to without the pressure of losing their home or car, for example, forcing them to make a premature settlement decision.
Just as an attorney decides whether to take on a case based on the facts of the situation, consumer legal funding companies base their funding decisions on the merits of the case as well. Oasis employs underwriters, attorneys, and financial experts who all come together to offer the best product possible to consumers. Since the value of a case does not change based on the presence of consumer legal funding, Oasis staff are conservative in their funding decisions. Given that attorneys in these cases are already working on a contingency fee basis and therefore absorb all costs associated with the case until a resolution is reached, there is no need for an Oasis client to use the funding they receive to pay any legal costs.
Perhaps most important to note is that at no point is Oasis involved in the outcome of a case. We have no further involvement after a contract is signed and a funding is made. We do not weigh in on any aspect of the case including settlement offers and in fact, when cases settle for lower than anticipated, it requires us to reduce our fee. The funding that Oasis provides to consumers does not increase litigation costs, but rather, ensures that plaintiffs don’t have to endure excessive hardship while they wait for a fair settlement to be reached in their case.
Does Consumer Legal Funding Encourage Litigation?
August 2, 2010
There are those who say that consumer legal funding encourages litigation and leads to frivolous lawsuits. This is simply not true. Oasis Legal Finance is committed to upholding the highest professional ethical standards for the industry.
Oasis has set a standard in the industry that stipulates that only individuals with an existing case or claim can receive funding. Put another way, any person who seeks out funding from Oasis must already have an attorney and a viable claim. Funding companies simply do not generate lawsuits and, in fact, most fundings are made at least 6 months after a case has initiated.
In addition to industry standards that prohibit companies from generating lawsuits, there is some data to support this. A 2007 article entitled Examining the Work of State Courts: An Analysis of 2007 State Court Caseloads found an inverse relationship between consumer legal funding and the number of tort claims in the United States. The authors found that over a ten year period the number of legal fundings rose by 37% while tort caseloads decreased by 24% over the same period. Although the decrease in tort claims cannot definitively be linked to the rise in legal fundings it debunks the claim that fundings encourage and increase litigation.
Despite the fact that there are those who would like to suggest that the existence of consumer legal funding is a “bad” thing because it leads to more and more lawsuits by providing a financial incentive to people to file frivolous claims, there is simply no data to back it up. The reality is that consumer legal funding is a valuable resource for plaintiffs who need help making ends meet while they wait for their case to settle.
I recently received a phone call from a person looking for cash to help them out while they waited for their lawsuit to settle. Simple enough because that’s what we do. However, before they continued they wanted a few things clarified… namely, were they calling the right place? At first I was a bit dumbfounded because after all, the name of our business is “Oasis Legal Finance.” The customer proceeded to say that when they did a search on the Internet there were many companies that were displayed in the search results but many had different terms; lawsuit loans, cash advances, legal fundings, etc., which was confusing to the customer. They asked if Oasis provided loans, advances or fundings?
And that’s when it hit me… sure, we understand that all of the above terms refer to the same thing because all those terms have been used to describe the service we provide as our industry has evolved over time. But in fact the terms lawsuit loan, legal cash advance and legal funding don’t mean the same thing and can indeed be confusing. As a consumer, it is easy to see how they might look at the terms lawsuit loan, legal cash advance, and legal funding as three completely different products/services:
1. A loan, well.., is a loan. A great example is when a bank gives you money to buy a car. You make monthly payments to pay back the loan. If you can’t make the payments, the bank comes and takes away the car.
2. An advance can be a trickier to define. A perfect example of an advance is if your employer gives you an advance on your paycheck. They are giving you money ahead of when you would normally get it. Your employer isn’t loaning you the money. On occasion however the word advance and loan is used to describe the same thing.
3. A funding is… ummm, well what is a funding anyway? Traditionally the term funding has been used to describe a transaction where one person/business provides cash (funds) to be used for a specific purpose; i.e. we’re funding the community project, or we’re funding our retirement account.
So, why then were all these terms used to describe the same service? As many industries grow from just starting out to being established in the marketplace, the terminology to describe the business (industry) and/or its products can change for several reasons. When the legal funding industry first began, there was nothing like it in the market. Providing people involved in personal injury litigation with cash to pay for basic living expenses while they waited for their lawsuit to settle was almost completely unheard of. As well, the term “funding” didn’t really exist with the same meaning as how it is being used today. Instead, words like “loans” and “advances” were used in absence of a more accurate descriptor because that is what the consumer was used to.
None of the traditional definitions for words like loan or advance, or even funding provided a perfect match for describing what companies like Oasis Legal Finance, does. So, over time we’ve adopted legal funding as the most accurate descriptor of the service we provide.
Contrary to a loan, a “legal funding” does not require monthly payments, and while it does require a valid legal complaint and an attorney to base the transaction on, the transaction is non-recourse. Non-recourse simply means that if the person’s case is lost, then the person does not have to repay the funded dollars to the funding company. This is a significant, game-changing difference versus a loan!
So, what do so many companies still use words like lawsuit loan, and cash advance? I’ll tackle that in my next post…
Change of View: Attorney Now Finds Value in Legal Funding
February 26, 2010
I want to share a story with the attorneys that are still ambivalent about legal funding. Yesterday I had a conversation with an attorney in Florida, about his client that was in desperate need of money or her house was going into foreclosure. The attorney told me that his client, a nurse of 20 years, could not continue to work in the same capacity after her fusion back surgery. The surgery was required as a result of injuries she suffered in a major car accident. In fact, she may never again be able to bear weight on her feet for an extended period of time.
The attorney continued to say that his client is the bread winner in her home and is raising three children. The attorney mentioned that she has nowhere else to turn for money. She has no living parents and her credit cards are all at there limits! The attorney told her to call Oasis Legal Finance and they will be able to help her get the financial aid she needed.
This is not an atypical case for legal funding. What is new is the change in view from the attorney. Two years ago this same attorney told me he would NEVER refer a client for legal funding.
I called him to thank him for the referral and asked him what had changed his mind. He told me that he lost two clients last year because he wouldn’t let them get legal funding, even though they needed the money. However, he only found out the reason he lost those two clients later, after they had switched attorneys. He also found out that each of their cases settled for over 100k. He told me he would never make that mistake again. He would use legal funding and would refer his cases to me as long as I listen to him about the funding amount because he knows the case the best. He continued that if I could work in that capacity that we would have a long happy relationship.
I assured the attorney as I do all my attorneys all over the country that Oasis Legal finance is the largest legal funding company for a reason and I would never over fund his cases. We now have a great working relationship and he only calls me when his clients are in a financial bind and need money quick.
- Ila Mellul Sr. Legal Director
Legal Funding Will Help You Level the Playing Field
January 29, 2010
The legal funding industry, also known as legal finance and litigation funding, was created for a simple reason – to help plaintiffs with a personal injury claim in financial distress. Oasis takes pride in providing money to plaintiffs to pay for groceries, rent payments, car payments and tuition when no one else is there to help. Legal funding from companies like Oasis helps plaintiffs in their time of need when family, friends and banks are unable to offer financial assistance. Poor credit does not matter to Oasis and Oasis will get the money to the plaintiff quickly.
There is a secondary benefit that plaintiffs obtain from legal funding. The benefit is “leveling the playing field” between the plaintiff and the defendant. Litigation is a multi-billion dollar business where financially strong defendants often wear down cash strapped plaintiffs by not settling cases until years after the accident occurred. The defendants know that plaintiffs often will accept an inadequate amount of money quickly to settle their case rather than wait it out until the plaintiffs can settle for fair value. Legal funding from Oasis can enable plaintiffs to solve their financial problems and wait for their attorneys to settle their cases for a reasonable figure.
A plaintiff in a personal injury case had the unfortunate experience of being involved in an accident caused by the defendant. Legal funding can be used to help the plaintiff avoid a second unfortunate experience by providing financial aid so a fair and reasonable settlement can take place.
Why should you settle your case for less than it is worth. Oasis is here to help.
- Michael Pekin, Esq., EVP Oasis Legal Finance
