Litigation Funding: An industry in controversy and the firms that do good
About 20 years ago, the legal funding industry was born from the minds of a few enterprising attorneys. They developed the idea to provide plaintiffs with much-needed capital in return for repayment upon the successful settlement of their case.
This idea did not come without controversy and the personal injury space, which was already marred with unhappy clients and deceptive litigation practices became the focus of regulators, city council members and other politicians. They wanted to drive legal financiers out of business and did not want another set of eyes on some of the more highly complex cases.
With all this happening, the litigation funding industry has still flourished, and hundreds of independent investors and family offices have begun to look at this industry as a non-correlated alternative investment that could be a key in their portfolios. Among these funding companies, Baker Street Funding, run by CEO and President, Daniel DiGiaimo is a perfect example of litigation funding done ethically.
Coming from the wealth management space, DiGiaimo brought in a fresh perspective and a client-first approach. Since he was used to dealing with high net worth investors, he decided to take those same service principles and apply them to personal injury plaintiffs.
Like most litigation funders, Baker Street works directly with attorneys to help provide their clients with access to a portion of their settlement funds before their cases settle. They have helped thousands of plaintiffs pay for things such as retaining a childhood home and staving off foreclosure, to helping put a client’s wife into a proper treatment facility so that she had top-notch medical care in the last few months of her life.
Unfortunately, not every firm operates with the same integrity and client focus. Many of the large litigation funding companies see clients as a financial means to an end and do not provide a level of care that is acceptable. There is an increasing number of stories of companies in this industry charging outrageous rates and not returning client calls or emails.
In February, the Litigation Funding Transparency Act was introduced by lawmakers. The bill only applies to class actions and would require plaintiffs to disclose that they have received third party funding. The real fear with a bill like this is that it could apply to personal injury plaintiffs. This could prove to be an extremely harmful thing to plaintiffs and will essentially notify defendants in these cases that the plaintiff needs money and may either accept a quick settlement or run out of money if the case is dragged out.
In a political and legal environment that already favours large insurance companies, this could tip the scales increasingly out of favour for plaintiffs that have already gone through an extremely traumatic experience.
While DiGiaimo says “the litigation funding industry is always changing and I am confident that we can adapt to any regulatory hurdle but we will always advocate for plaintiffs in political matters because at the end of the day their interests are key to our success and unfortunately, political powers that be, normally don’t focus on who their legislation actually affects”.
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