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Lawsuit Financing:
An Exciting New Niche In The Cash Flow Industry (Part One)

This is the first part of a series of articles on the specific field of Lawsuit Financing.

Lawsuit Financing covers three major areas:
• Pre-Settlement Funding (funding for a case before it settles)
• Appellate Funding (funding for a case after a judgment has been awarded, but is not final because it is being appealed)
• Structured Settlement Funding (funding after the case has settled)

Why Did I Choose Pre-Settlement Lawsuit Financing?
I was first introduced to Pre-Settlement Lawsuit Financing back in 1999. I was curious
about it. I did a little research and decided to keep my mind open to it as another niche to work in the future when I felt comfortable with the referrals coming in from my factoring business. Interestingly enough, the first attorney I spoke with about Pre-Settlement Lawsuit Financing sent me three clients in the next 5 months!

Pre-Settlement Lawsuit Financing continued to intrigue me. After all, there is no shortage of lawsuits being generated in this country! After the Cash Flow Convention in Chicago in May 2002, I decided to make this unique niche the focus for my business. I wrote a number of articles for the American Cash Flow Journal, and in October of 2002, I started my first Mentoring Groups.

Why Focus Your Cash Flow Business On Lawsuit Financing?
How about because:

· You can earn residual income from a single contact
· There is no shortage of folks who need this type of financing
· It's interesting and full of variety
· There is little competition

Once you establish a relationship with a personal injury (PI) attorney, you are almost
assured income on a monthly basis.

Let's "follow the breadcrumbs trail" to see why..
A good PI attorney will have between 100-150 active cases at any one time. Approximately 25-30% of those cases might benefit from having Pre-Settlement Lawsuit Financing available. Of those 25-50 plaintiffs, 25-30% will actually qualify for funding. Which means if you have one PI attorney sending you cases regularly you will see approximately 6-12 cases funded a year.

A typical case will receive funding of $2,000 - 5,000. On average, you will receive 10-15% of the gross profit to the funding source. That adds up to you receiving between $2,400-12,000 each year from one contact. If you have 10 contacts, you could earn between $24,000-$120,000 per year.

Let me ask you this question: How many PI attorneys are there in your area? Just for kicks, go ahead and take out your telephone directory. Flip through to the attorney section and count how many are listed under the sub heading "Personal Injury." Go ahead, I'll wait…

So how many were there? A dozen? Over a hundred? Over two hundred? The point is, no matter how big or small your town is, there are plenty of attorneys available for you to establish a fruitful business relationship with.

These attorneys are the “bread and butter” of your business. You can also fund class action, breech of contract, product liability, medical malpractice, and wrongful death cases. In these types of cases, the plaintiffs may be asking for hundreds of thousands, if not millions, from the defendants. Finding on these cases can be in excess of $100,000.

You Become An Expert
It doesn't take long to establish yourself in your community as a resource. Eventually, you will have cases involving class action, wrongful death, product liability, and breach of contract coming your way. These cases may involve funding for expert witnesses, research, attorneys’ fees, and plaintiff requests, which total multiples of tens of thousands of dollars. All of which is available through Pre-Settlement Lawsuit Financing.

As a secondary source of income, I'm also going to show you how to market for Structured Settlements. Structured Settlements are very often the final result of a suit. Handling Structured Settlements involves a bit of expertise and patience on your part, but the commissions can be substantial.

No Competition
When was the last time you heard an advertisement for Pre-Settlement Lawsuit Financing on the radio or on TV? When you look in that section of your local newspaper where you see lots of ads proclaiming, “We Buy Mortgages!” do you ever see an ad offering to fund a lawsuit? In the phone directory, you will find page after page of listings for lawyers. Do you find any listings for Pre-Settlement Lawsuit Financing?

In case you haven’t gotten the picture yet, what I am trying to tell you is there is an
opportunity here if you want to pursue it. There is little-to-no competition, which means you won't be bumping up against competitors for the business you've worked diligently to find. You are likely to be the only game in town.

So How Big Is The Market?
By all indicators, the Pre-Settlement Lawsuit Financing market will experience significant growth over the next five-to-ten years. In 2002, more than 3.3 million people were injured in automobile accidents alone. Combine that with other forms of personal injury, commercial litigation, and insurance loss disputes, and the settlement market quickly exceeds $160 billion! Just in case you've never seen a number that big, it looks like this: 160,000,000,000.

What do you think? Is that enough potential opportunity for you?!

The market potential for Pre-Settlement Lawsuit Financing is tremendous. In the U.S. today, some $40.37 billion (another one of those numbers with 10 zeros in it) in legal disputes are settled each year by private employers with individual employees, contractors, and other businesses. Insurance companies are involved in more than $100 billion of annual legal resolutions involving personal injuries, individual medical liabilities, physician malpractice, and workers' compensation. Research estimates that the total annual volume of qualified cases is in excess of $160 billion.

The overall market forecast for Pre-Settlement Lawsuit Financing is expected to be around 10% of the market potential, or roughly $16 billion in case settlements. This figure is likely to increase as new financing products and services become more widely accepted over time. Pre-settlement Lawsuit Financing is expected to gain a wide national following throughout the legal services industry.

The legal community is rapidly embracing Pre-Settlement Lawsuit Financing cash
advances as a sound and highly ethical service that benefits plaintiffs and their attorneys, with defense attorneys being the obvious few detractors.

Cash can also be made available for expert-witness fees and attorney fees, as well as
appellate case funding. Qualified attorneys who have pending receivables and need working capital to cover that occasional “cash flow crunch” can use Pre-Settlement Lawsuit Financing to perk up their cash flow.

Do You Need To Be A Lawyer To Succeed In This Business?
Absolutely not! Sure, you will need to become familiar with some of the language that is peculiar to this profession. There is “law speak” just as there is a special language used in every profession. If you are not a plumber, you are not familiar with the basic tenant of plumbing, which is “SRDH.” Stuff Runs Down Hill. (Kinda like stuff happens, only different.)

You will NOT be poring over files of court documents. There are simple forms you'll use
to gather information. It is the responsibility of the funding source to figure out if a case is worthy of being funded. This is often referred to as "doing their due diligence."

Note: Pre-Settlement Lawsuit Financing Isn't Available In All States, But Don't Let That Stop You. At the time of this writing , Pre-Settlement Lawsuit Financing is not available in Louisiana, Maine, and Ohio. But geography isn't a limitation in marketing your business. Whether you live in these states or not, you can easily market outside of your local area. For example, I currently have cases that I am working on from Florida, Illinois, California and South Carolina just to mention a few. All from my home office in Arizona. This is possible, thanks to the Internet and cheap long distance rates.

In the next part, we will get into how you market for Pre-Settlement Funding clients, how and when you get paid, and the “nitty gritty” of working cases.

In the meantime…Be good to yourselves, and fair with each other.

Richard Shapiro, CFS, DCFS, is a Master Broker, a member of the Million Dollar Club and a former visiting instructor for the Pino Training Organization. Richard is the owner of Condor International Financial Services, 3305 North Swan Road, Suite 109-148, Tucson, AZ 85712. He can be reached by phone at, (520) 529-4960, or through fax at (520) 299-3450. His E-mail address is, Condor@CondorFunding.com, and his website is www.CondorFunding.com.