The Effect of Covid-19 on Personal Injury Law and Lawsuit Funding

As lawsuit “funders”, we are plaintiff advocates.  As such, we keep abreast of any developments in the justice system as they pertain to personal injury or other types of civil cases.  The current climate surrounding the Covid-19 outbreak and response impacts the legal system and its participants.  This post will discuss some of those outcomes.

Delayed Resolution for Litigants

2020 saw the widespread shutdown of government services, the court system included.  As court employees were sent home, delays in processing new filings and dealing with the existing case load were a logical result.  New filings simply add to an already crowded docket in most jurisdictions.  This only compounded an existing problem.  Even more troubling is that there is no end in sight.

For example, the pandemic forced the New Jersey courts to move from in person operations to remote proceedings in March 2020.  Some jury trials were completed in October through November.  By mid-November, the Court suspended in-person jury trials.

Recently, The NJ Supreme Court ordered a 2-phased approach to virtual jury trials during the pandemic.  By April 5^th, there will be a statewide implementation of virtual court proceedings for ALL case types.  The Order also guided that single plaintiff, single defendant cases with limited issues and limited witnesses would be given preference in scheduling.  More complex matters would be scheduled later.

And NJ is not alone.  Several states are limiting proceedings to only bench trials (trials before a judge, not a jury).  Others, such as Connecticut have cancelled jury service until a pre-determined time.  Other state Covid-19 responses can be found here.

One can only imagine what impact the pandemic will have on the delays litigants face as a result.   Already facing an uphill battle against financially strong defendants, plaintiffs can expect to suffer even more.  Many will be forced to accept low-ball settlement offers just to survive financially.

Cash Flow Issues for Attorneys

The backlog of cases in the court system is also having a negative effect on law firm cash flows, particularly with personal injury contingency fee arrangements.  Many firms saw their revenue plummet from the 2020 shutdown.  Although there was a fair amount of Payroll Protection Program (PPP) money floating around, many plaintiff firms saw a significant drop in in-flows.  The PPP has run out and until other stimulus is passed, the uncertainty remains.

Further, extending the shelf life of civil litigation does nothing to put pressure on insurers who have every incentive to dig in their heels and play the waiting game.  To delay is to deny and financial strain can force some personal injury attorneys to recommend lesser settlement amounts than they would under normal circumstances.  These are trying times indeed.

Coronavirus Effect on Personal Injury Plaintiffs

Personal injury attorneys and clients might be served well by tempering their expectations about how long it will take to resolve any particular case.  Back logs have existed for decades and are only made worse by the “new normal” response.

How long will the situation persist?  That’s anyone’s guess.

What will be the effect?

Personal injury plaintiffs and attorneys will most likely endure like they always have.  Some however, will face real difficulties, especially if the wait for compensation extends due to additional coronavirus panics such as additional lock-downs, the emergence of additional strains, etc.

There is a solution.

Plaintiff and Attorney Loans

Lawsuit funding and law firm loans entered the legal finance marketplace to level the financial playing field between plaintiffs and financially strong insurers.  By advancing money to plaintiffs and their attorneys, lawsuit lenders provided the financial backing to help litigants pursue justice and avoid having to accept “low ball” settlement offers simply because of financial strain.

Injured plaintiffs are often unable to work due to their injuries. Often, benefits such as workers compensation and other entitlements are not enough to cover expenses. Advancing money on pending settlements simply makes sense. The plaintiff/claimant is afforded the opportunity to litigate the matter thoroughly and secure a just resolution.

Plaintiff attorneys normally work on a contingency fee arrangement. This means they are not paid until the successful outcome of a case or claim.  Not surprisingly, these attorneys have seen a significant drop-off in cash flow in 2020 and 2021.   Certain specialties have been hit particularly hard such as more complex matters involving multiple expert witnesses on both liability and damages.

Matters such as commercial litigation, product liability, and medical malpractice cases can expect even more delay.  Since these disciplines can involve a substantial outlay of money in terms of time, support staff, and expert fees, it would not be surprising if these types of practices are hit especially hard.

Legal funding allows for plaintiffs and law firms to pursue justice properly without financial duress. A logical outcome of the coronavirus panic is an increase in the need for lawsuit funding for personal injury plaintiffs as well as lawyers handling contingency fee matters.

Thanks for listening.