The title of the latest issue of Living Safer Magazine resonates with me: You Weathered the Storm: What’s Next? The issue is all about how to protect your property, your family and your finances in the wake of a disaster. While many of the articles discuss helpful emergency gadgets, health and well-being issues and natural disasters, the meaning of “weathering the storm” goes a bit deeper for me.
This year, we launched the website for the Bairs Foundation, a not-for-profit organization my wife and I founded. The assistance our foundation provides families the ability to weather overwhelming odds and financial rigors of the litigation experience.
These scenarios are not rare: A catastrophic injury, along with the related costs and an inability to earn income, typically forces families to run out of money and exhausts all of their resources. The unregulated non-recourse loan industry is there to lend them the capital they need, but interest rates can potentially devalue the equity inherent in a case. At maturity, issue is exacerbated if the client feels what would normally be a good settlement is perceived as meaningless with the heavy burden of paying back the funding plus interest — to the extent some clients will just say “go try the case.” Some cases should never go to trial, if they can be settled equitably.
The first storm to weather is the repercussions of the injury – abrupt and potentially life altering. Keeping the family afloat financially can be an equally tough storm. The Bairs Foundation safety net is what families need to go the distance with their lawsuit. The foundation charges a low interest rate at seven percent simple interest – a big difference from the 50 to 100 percent interest that some lenders charge.
What is a Lawsuit Loan?
A lawsuit loan is a loan or agreement that is an advance of money today that you use your lawsuit as collateral for. Lenders and funding companies or litigation finance firms agree only to look to the proceeds of the lawsuit and not any of your personal assets. They take the same risk that your trial lawyer takes: if there’s no recovery or settlement, you don’t pay them back.
Lawsuit loans are also known by other names, according to NOLO, including: lawsuit cash advances, litigation financing, lawsuit funding, and settlement funding.
Exceedingly high interest rates prevail throughout this industry, and the companies justify it based on the risk that they are taking. You will have to sign an agreement, notify your lawyer that they are allowed to speak with them, and you will have to agree that the funding company will be paid back before you receive any money from the case. These loans or funding agreements can be done as early in the case as is needed, leading up to mediation or trial, post verdict, and even post settlement.
Seeing the caustic effect non-recourse lending can have on individual clients, however, legal practices and the civil justice system has motivated us to ACT! Our sustainable model of fundraising/providing capital is intended to be a service to the civil justice community. We hope to inspire leadership amongst nonprofit and other philanthropic foundations to considering serving the needs clients have who have been catastrophically injured.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).