Flaws in Legal System Give Rise to Lawsuit Funding

Sometimes it is appropriate to get down to basics when analyzing an issue.  Although we have written extensively about the pre settlement funding business and how the market players are simply filling an existing need, what is rarely discussed is why there is a need in the first place.

The answer is that the legal system is not perfect.  Like all systems, certain problems arise.  In a free society, market participants can remedy some of them.

The delay in adjudicating cases is one such problem.  Lawsuit settlement funding seeks to remedy its effects.

Legal System Does What it Intends

No one would deny that a legal system designed to resolve civil disputes is a good thing.  The alternative might be people taking into their own hands the means to resolve these disagreements.  One can easily envision violent altercations as the ultimate form of dispute resolution.  In a civilized society, the courts offer parties to a civil dispute an opportunity to resolve it without bloodshed.

Further, a legal system which utilizes well documented regulations and historical precedent builds a foundation to resolve all future disputes in a more equitable fashion.  With this foundation, those who make their living navigating the legal system can learn those standards and help others with this expertise.

The problem with the legal system has never been its inability to resolve conflict. In fact, many, MANY, rules and regulations are in place specifically to deal with potential conflicts and pitfalls in the process.  Most of the time, these were implemented because of the existence of past problems.  Ultimately, the system reaches its intended destination – justice.

Speedy Justice

One often cited problem however is the speed in which justice is served.  While many small disputes can be adjudicated in only a couple of months, the vast majority of cases will not reach their final conclusion for many months and more often than not, years.  Of course, the time its takes from complaint to settlement varies from venue to venue and from case to case.  Factors such as the amount of other cases on the docket, discovery, lining up witness and expert testimony, and coordinating attorney calendars can all contribute to these delays.

And this is not necessarily a bad thing because a great deal of people make a living providing these services (justice) to the public.  Certainly the speed of the civil justice system could be increased, but at what cost?  Are more judges, clerks, registrars, courthouses, lawyers really what we need?  Taxes and borrowing must pay for it.  Do we need more of those?

This delay also adds an added benefit of filtering out frivolous and/or petty claims because it simply may not be worth the effort for parties to use the system.

For the majority of participants, the legal system in the United States operates as intended.  All citizens are allowed access to the courts to rule on disputes between parties.  It may take some time, but ultimately the matters are resolved.

For others however, the time it takes to resolve a lawsuit can pose a real problem.  For example, personal injury plaintiffs, who are unable to work due to their injury, often encounter severe financial distress while they wait out the judicial process.  In this situation, the delay in justice can really be uncomfortable.

For years, plaintiffs met this financial stress in traditional ways like taking  loans from family members, selling of existing property, credit card cash advances, etc.  In the last couple of decades, settlement funding emerged to meet the needs of these individuals.

Lawsuit Funding Responds

The lawsuit funding business, which provides liquidity to plaintiffs prior to their case settling, entered into this arena market to fill a need.  Shortly thereafter and not surprisingly, critics emerged.

Although settlement funding serves a legitimate need, certain parties did not welcome the practice with open arms.  Because lawsuit settlement loan transactions alleviates a plaintiff’s financial stress, opposing parties quickly saw this as a threat.

They responded with a public smear campaign claiming people are not equipped to make their own decisions and that smarter, more experienced people should make the decisions for them.  They point to “outrageous fees” to claim people are getting taken advantage of.

As individuals, we can clearly see the folly in this thinking.  Collectively however, these arguments have gained some traction leading to legislative proposals in various jurisdictions.

As Americans, it makes sense to err on the side of freedom of choice.  If lawsuit funding provides a solution, and it makes sense for an individual in a lawsuit, then he/she should make that determination.  It is not their fault the judicial process has flaws.  It would be improper to limit his/her options under these circumstances.  After all, lawsuit funding is simply one possible solution.

Thank you for your interest in the lawsuit funding business.