TrialFunder: Providing Equality In Crowdsourcing Litigation In A Free Market

Posted: Nov 6 2015, 11:05pm CST | by , Updated: Nov 6 2015, 11:48pm CST, in Latest Business News


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TrialFunder: Providing Equality in Crowdsourcing Litigation in a Free Market
Credit: Anoush Hakimi/TrialFunder
  • Litigation isn't cheap when self-paid.
  • When investors finance quickly, plaintiffs win.
  • Success is all about equal opportunities.

Founders of TrialFunder aim to provide economical parity in the world of litigation. And investors offer money upfront while earning a profit in the new free market.

Ligation and victory as an American individual can be difficult, especially for the average American worker. Think about cases where a major corporation or organization won based on ability to pay court costs up front. While Julia Roberts shined in Erin Brockovich, that’s only a Hollywood daydream.

Reality is often much more difficult and yields little success against economic powerhouses. Who would win: David’s tiny stone or Medical Corporation X’s ability to block out the sun?

So how does one combat the legal system’s inequality?

You ask help from Anoush Hakimi, CEO of TrialFunder. TrialFunder works as a free marketplace for investors to contribute to sound court cases. As integrated system with all social media platforms, investors are more accessible.

After all, a person can’t fund what they don’t know exists. And unlike a payday loan, TrialFunder has already examined the necessary legal documents and assigned a payout value. The company offers the prospect to leverage funds to carry out a lawsuit, but issues a warning for all potential applicants of realities.

“Counsel and plaintiffs should be very careful when seeking out funding. We have the best rates out of any funding firm in the country, and deal fairly with our clients.”

‘Plagued our justice system’

“TrialFunder was borne out of a necessity in the legal world,” says Hakimi.

In a world with an abundance of injustice, a group of attorneys “who witnessed first-hand the disparity in the application of the law” took a stand. And that desire for more equal representation pushed a major decision to build a “sustainable, free market solution to a problem that has plagued our justice system for a very long time.”

TrialFunder is one of several crowdsourcing litigation funding sources. New York-based LexShares follows a similar business model where hedge funds aren’t necessarily the only people willing to risk a possible failed trial.

In a recent interview with Tradestreaming, CEO Jay Greenberg notes the company focuses on the larger lawsuits, not necessarily the average citizen, and offers a high payout. Investment opportunities include cases with a financial range of “a one hundred thousand to one million dollar funding requirement.”

A majority of cases involves “breach of contract, fraud, whistleblower, business torts and civil rights.” Greenberg’s background in Deutsche Bank’s technology investment department helps set up a larger payout.

And in 2013, Toronto-based JustAccess launched with $10,000 CAD as a way for the average citizen to fund needed litigation tactics. If a plaintiff needed access to documents with a high fee, the fund would be able offset the costs.

As the world remains on a slow upswing from a near depression, eliminating fees may mean success for a smaller party. Parity through social movement and accountability.

‘Reformed behavior of defendants’

So what makes TrialFunder stand out in a growing market? Honor, if CEO Hakimi is to be believed. “Some other firms charge incredibly high rates, which gives the industry a bad name.”

TrialFunder has a “very vigorous underwriting process” on cases. And that has led to a high success.

“We haven’t picked a single loser yet. We intend to keep it that way.” Meaning that investors are guaranteed on their sound venture. Better than the lottery. And that’s important for the smaller cases that only need a small seed.

The days of only hedge funds backing a case are long gone.

“We believe that we can return exceptional returns to our investors, without being greedy. That is a sustainable solution.”

Sustainability sends a powerful message to any person who would abuse power and influence. Imagine working 40 hours a week at a low-end job and an accident completely eliminates the ability to keep working. Lawyers often pay their own trial fees until a settlement or judgment is received.

If a lawyer has 10 or 15 such cases, resources are generally tapped out. Opening the market to fundraising, an eventual payout is guaranteed and plaintiffs receive a chance to win their case.

“By providing the fuel to either the living expenses or litigation costs of meritorious litigation we level the playing field and make it possible for plaintiffs to have their day in court,” said Hakimi.

“Ultimately, the result will be reformed behavior of defendants and a safer and more tolerant society for all of us.” Social change happens when a market evaluates the economic change.

‘Recoveries are practically guaranteed’

In a business ideology focused on combating big business’s avoid payout delaying tactics, the new market provides a more legal route of making sure the wealthier party can’t “buy justice.” John Grisham’s The Rainmaker turns into TNT’s Leverage without needing a set of expert thieves and hackers. Even if Hollywood does offer a pretty luxurious judgment.

Take the NFL concussion case.

By funding where payout is expected, former players are able “to get an advance on that cash now, so they can pay their rent and living expenses.” Lawsuits may take quite a bit of time to pay out, which doesn’t help retired players who “have huge economic issues.” And TrialFunder’s been there from the beginning.

A majority of players won’t earn Tom Brady’s salary and loses all benefits when retiring from the NFL. Benefits include medical care after the field’s left behind. Devastating effects from concussions are long-term. Along with physical disabilities like career-ending knee injuries, crippling arthritis, and addictions to pain medicines.

Since “litigation has been settled the recoveries are practically guaranteed,” the return on investment and rate of return are a perfect opportunity for investors. And that is an important distinction and the reason for validating litigation success.

On a scale of Angel Investors, Kickstarter, and Shark Tank, the company works in a style that’s more latter than former. The only really major difference is that the board dissolves on payout. Private investors will earn the initial investment amount back as well as a return of 60-125%.

‘Social and civil justice are possible’

Are there any successes after creating an advantageous market for plaintiffs who need help?

Investment funds in the Joseph Rosales versus the city of Chico, California, helped to push a dismissal of summary judgment. In other words, the plaintiff won’t receive a small pay out.

Rosales and his dog were in an accident involving a flipped car. Worried for his dog and possibly disorientated after the crash, the 63-year-old man couldn’t comply as fast as an police officer preferred. Still trying to search for the dog, the police officer pulled his arm; demanding the man get out of the car still resting on its side.

As he was trying to comply while still standing in the middle of the wreck, the officer continues to bodily force the man to obey. Instead of waiting for paramedics, the police officer didn’t listen to the injured man and allowed bystanders to witness the exchange due to “danger” from the wreck.

A woman attempted to help as the officer dragged the man out of the wreckage—his dog long forgotten as the brutality continued. Multiple angle shots illustrate an officer unwilling to listen to the man and his needs. Instead the man is dragged on the ground.

An exchange between the police and the man included an order to “stop touching” him while Rosales asserts not touching the other man at all. Later, Rosales and his lawyers discover a spinal injury due body slam on the ground. Diagnosis and subsequent follow up become possible from investor funding.

If the officer had waited until ambulance and paramedic arrival, the spinal incident wouldn’t have occurred.

“Recently, the Court in that matter denied the defendant’s motion for summary judgment in its entirety in a very strongly worded order. We are confident (given the video evidence) that if the matter goes to trial there will be a plaintiff verdict. And we are happy to have made Mr. Rosales’ access to justice possible. Social and civil justice are possible if playing fields are level.”

The video may be disturbing to watch, but it highlights the function of viral videos and private citizen recordings.

And investors in TrialFunder campaigns gain “much higher returns by a multiple of 6 or 7 over traditional investment opportunities, like real estate or stocks.” Heady sums for those with the means of supporting clients in need for monetary access. A symbiotic relationship that combines financial reward and a do-gooder element.

The best of both words for plaintiff, community, and investor.

‘Own informed decision’

Late last month, a video of a school’s resource officer slamming a teenage woman to the ground went viral. The officer, Ben Fields, was fired after backlash from social media. But the termination wasn’t necessarily performed out of the goodness of the county's heart.

In a LinkedIn post, Anoush Hakimi points out that by firing the officer, successful litigation against the Richland County Sheriff could be more difficult for the victim. Civic liability offers a shield for the department since they’ve denied the actions were within the framework of their department.

“Specifically, in all cases where excessive force is alleged against a police officer, the alleged victim’s civil attorney in the expected civil lawsuit is certain to make a claim under 42 USC Section 1983. Section 1983 creates a right to a private civil action for deprivation of constitutional rights, which in this case is the use of excessive force.”

So the young woman would be able to go after Fields without including the county in the lawsuit, even though he was employed at the time. However, since “video evidence can be incredibly persuasive at trial,” the likelihood of success increases.

Part of the success comes from disallowing faulty witness testimony and that “video testimony allows each member of the jury to make their own informed decision regarding the alleged violation.”

Imagine being on a jury and watching a scene, offering absolute evidence and corroborating testimony about the veracity of the video, whom would you sooner believe? The defendant or the plaintiff? And would the jury understand jargon without visual cues?

“Deep pocketed defendants have historically relied upon the general public’s lack of awareness of the legal system. This has changed with the public’s access to information through the internet, and the fact that most people now carry a video camera in their pockets wherever they go.”

In other words, taped behavior invites change in policy. If not for the justice of the public, then a very limited pocket for many community services being paid by the victims.

“Public exposure of alleged wrongful acts forces accountability. One of the benefits of the TrialFunder platform is that it exposes the bad behavior of defendants to public scrutiny.”

The victim’s attorney Todd Rutherford spoke to the Los Angeles Times last month. “She’s bruised and battered and hurt — physically and emotionally.” Not only has her academic future been altered in some part, but so have her name and face.

With a viral video comes pros and cons. One con being a reflection of a violent assault that’s placed her left hand in a cast and swollen sections along the back and shoulders. How does a student trust authority figures who openly abuse? Or ones who stand around and do nothing? Psychological questions that a lawsuit can’t answer.

‘Publicly perceived as a good and fair actor’

Since the death of Michael Brown in Ferguson, Missouri, in 2014, video surveillance of police behavior has soared. Social media’s platform offers trial proof in the form of visual evidence. And videos compels an honest review by juries. Sports Illustrated noted that in the Aaron Hernandez trial, pictures and video showed a different version of what the defendant claimed.

According to Hakimi, photogenic evidence provides an even greater use in trial. “When a defendant’s bad behavior is subject to public scrutiny, the defendant is less likely to fight a legal war of attrition with the plaintiff and more likely to make a good faith settlement offer, so that it will be publicly perceived as a good and fair actor.”

While a lawsuit might prove difficult against Fields, another image emerges when forcing accountability through documentation. “This is in fact a good thing for society, because defendants will reform bad behavior within their organizations in order to avoid future negative public exposure and the associated liability.”

Parity, proof, and public service through private funding.

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