Using Litigation Financing to Level the Playing Field in Personal Injury Cases

There are plenty of critics of third-party litigation financing.  These critics complain about how greedy lawyers and funders can stir up unwarranted legal disputes and take advantage of vulnerable plaintiffs.  But these often overlook how important litigation financing can be to overcome unfair advantages that have been built into the American legal system over many years.

The systemic unfairness of the judicial system is most apparent in personal injury cases.  In such cases, the defense is typically directed by an insurer that has provided a policy to the defendant. Through lobbying efforts at the state and federal levels, insurance companies and associated special interests have advocated for things like shorter limitations periods, stricter rules of evidence, and higher procedural obstacles, all of which are designed to make cases harder for plaintiffs.  These kinds of advantages for personal injury defendants are baked into the judicial cake.

In addition, insurers have significant technological advantages that give them enormous leverage over plaintiffs in settlement negotiations.  Insurance companies have developed computer software that uses vast amounts of nationwide demographic data to analyze the value of personal injury claims and the economic ability of personal injury plaintiffs to pursue those claims.  Insurers have a unique ability to identify plaintiffs who are susceptible to low-ball settlement offers that undervalue plaintiffs’ claims.

All of these advantages seem even more unfair when one considers that, in personal injury cases, the stakes for plaintiffs are usually extraordinarily high.  In these cases, plaintiffs are literally fighting for their livelihoods and physical health.  Many times, these plaintiffs cannot hold on through a costly and time-consuming litigation process without an infusion of cash.  Too often, this cash is only available in the form of an unreasonably low settlement offer.

Given all of the advantages for the defense in personal injury cases, it is essential that plaintiffs find ways to make it easier for them to pursue justice.  Litigation financing is one way to level the playing field for personal injury plaintiffs.  While such financing has been widely accepted in the context of commercial litigation between large companies, it has a vital place in personal injury cases, regardless of the criticisms often leveled by the insurance industry and its allies.

Topics:  litigation finance, personal injury, third-party funding, medical malpractice, auto accident, slip and fall, litigation costs, legal costs

 Works Cited:

Joshua Schwadron, Litigation Finance: Doing Well by Doing Good or Just Doing Well? LinkedIn (Dec. 2, 2015) available at https://www.linkedin.com/pulse/litigation-finance-doing-well-good-just-joshua-schwadron