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Litigation Crowdfunding Slowly Gaining Traction
At this point, you can crowdfund just about anything. Campaigns to raise funds for medical bills, student loans, movies, new inventions, and startup capital have sprung up from all over the world, which led the crowdfunding industry to generate $16.2 billion globally last year in funding transactions. A new trend is emerging within the industry – platforms designed solely for litigation crowdfunding.
Platforms such as Invest4Justice, which became operational last year, have set out to provide both plaintiffs and defendants with legal funding from a crowd of investors or donors, asserting that those investors and donors can collect rewards that exceed 500 percent of the amount of funding provided. To date, the site claims to have raised $2,969,736.65 for 31 litigation crowdfunding campaigns.
According to the Swiss-based site, plaintiffs can offer a reward or request donations, but defendants must typically ask for donations since they will not receive compensation if they win their legal case. If 100 percent of funding is raised, the amounts are pooled and transferred to the litigant’s lawyer via Paypal or wire transfer. If the case wins, the litigant gives the percentage of compensation they have offered as a reward. If the case loses, they pay nothing. The platform receives 4 percent of the amount of funds that are raised at the time of transfer and also allows users to find peer-reviewed lawyers throughout the world, regardless of whether funding is needed, or to connect with third-party funders who might be interested in paying for the entirety of a case. The site states that continued developments within the crowdfunding and peer-to-peer lending industries as well as recent changes in champerty laws led to the development of their platform.
There is already a thriving, roughly two-decade old, offline market in the commercial funding of litigation, especially in the US and UK, through attorneys’ no-win, no-fee arrangements or third party investment. The trans-Atlantic litigation-finance firm Burford Capital, for example, reported revenue from litigation of $47.9 million in calendar 2014, up 23 percent from 2013, and total income of $82 million, up 34 percent from 2013, after increased revenue from its insurance unit and a foreign exchange gain of $8.5 million.
Like nearly every type of crowdfunding campaign, many question the viability of some of the cases presented on litigation crowdfunding platforms; however, Invest4Justice and its counterparts all claim to remove claims deemed as fraudulent and those that obviously lack merit – a practice that has become nearly ubiquitous within the crowdfunding industry as a whole. As this relatively new form of crowdfunding develops it will be interesting to see what types of cases are funded and what exactly the average return for investors will be.
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so, previously the lawyers would work for free and only get paid if they won. Now, they get paid either way and random people on the internet get stiffed if they don't win.
Never saw once a real estate crowdfunded platform that had a defined exit strategy. Not once.
max keiser is an investor in this ; funded with STARTCOIN!.
start litigation now with crowdfunding platforms that use digital currency. if it's not new, it's not worth talking about!
Quick, somebody set up a fund for Jon Corzine's defense. It's just a TRAVESTY what that man has been put through!
is this a sponsored story?
This will have such a positive long-term effect on the US, eh? This just expands the women's movements "divorce your way to the top" type of thinking. Now everyone can participate.
Well up until now we had to rely on the government to keep all those lawyers employed, much better to let the SJW sheep do it......
Finally, a way to get more money from little people to lawyers. We're fucking saved m8.
You folks are being too cynical. This is actually a fantastic development. Think about all the rights violations committed by cops every day in things as basic as traffic arrests. 99.999% of people will let it go because a) they're ignorant of their rights, but even if they aren't, b) they don't have the money to hire an attorney, and even if they did then c) most attorneys wouldn't take on the care for various reasons unless it was a really clear cut case of abuse of authority or abuse under color of authority.
So imagine being able to appeal to the public for help in taking a crooked cop or police force or sheriff's department or sheriff or <insert douchey law enforcement agen[t/cy] here> and then having the money given to you to take on the fight, so even if you lose you don't have to pay for it out of pocket. It levels the playing field as far as citizens suing police, the latter whom have the city or county backing them up with their respective legal and monetary resources. With more lawsuits come more victories in court, and victory sends a message to the douchebags.
As they say, money talks, and when it speaks in this case it says, "Keep your fucking pigs under control".
Embrace the change.
I am Chumbawamba.