Tag Archives: medical malpractice

How Litigation Funding Helps Medical Malpractice Plaintiffs

As more parties take advantage of litigation financing, the benefits of such financing are becoming more readily apparent.  That is certainly the case with medical malpractice cases.

A recent study, along with anecdotal evidence from attorneys, shows that litigation financing helps create more opportunities for deserving plaintiffs and produces better outcomes.  The study was undertaken by researchers from Vanderbilt University, and it examined the effect of litigation financing on a wide variety of consumer litigation, including personal injury and medical malpractice cases.  According to the study, after Ohio legalized litigation financing in 2008, medical malpractice plaintiffs there received judgments and settlements that were 13.3 percent higher, as compared to all other states, which were assembled in a “synthetic control group.”  The study’s findings suggest that the promised benefits of litigation financing are realized in practice.  That is, when a plaintiff has access to litigation financing, he or she can resist low-ball settlement offers made at the outset of the case.  In addition, plaintiffs with litigation financing can afford to pay for first-rate experts who can demonstrate the merits of their claims.  All of this leads to better settlements and favorable jury verdicts.

The attorneys who represent medical malpractice plaintiffs agree that litigation financing improves their ability take meritorious cases and to try them to achieve the best possible result. Because they take so many cases on a contingent fee basis, many plaintiffs’ firms often have cash flow issues.  When they are uncertain about their cash flow, such firms may decline cases that seem to require large expenditures for discovery and expert testimony.  But when a plaintiff can obtain litigation financing, that is not an issue.  As one attorney put it, “I basically never have to worry about whether I have $10,000 available for an expert to testify at my trial.”

In medical malpractice cases, as in many other kinds of cases, defendants often have an enormous advantage because their litigation expenses are paid by insurers.  But litigation financing levels the playing field for plaintiffs up against those defendants. Referring to litigation financing, one plaintiff’s attorney noted that “it allows us basically to go toe-to-toe with the insurance company in any case,” he said. “We have the funding available to get whatever expert we need in the case and match the unlimited spending that the insurance company has.”


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