There are tons of lawsuits. And the shame is that people don't take advantage of arbitration more often.

Arbitration is where two people involved in a contractual dispute of some kind go to a third party and agree to have their case heard privately. They agree in advance that they will abide by the decision that the third party arbitrator makes.

The Peter Lattman in Wall Street Journal had a blog post about arbitration today:

On the hot seat yesterday at the Supreme Court: The Federal Arbitration Act. Please don’t stop reading, this is important. Arbitration — which this FT story calls “a privatised form of justice” — has become an increasingly important part of the U.S. legal system. Big business has pushed for more arbitrations as a way of reining in excessive litigation costs. Here’s the oral-argument transcript, starring a couple of wily veterans of the Supreme Court bar — Sidley’s Carter Phillips and MoFo’s Beth Brinkmann.

The case before the court, Hall Street v. Mattel, raised the following question: whether the Federal Arbitration Act prevents a federal court from enforcing a parties’ clearly expressed agreement to appeal an arbitration award rather than the limited grounds of appeal provided for in the FAA. Big business argues that allowing a more expansive judicial review of arbitration awards would defeat the purpose of the FAA, which encourages dispute resolution outside the courts.

I love arbitration. I usually use it in all my contracts. But sadly, arbitration only works where the parties agree in advance to submit to it. That's why they call it binding arbitration — it binds both parties. In fact, the courts will usually enforce an arbitration judgment much as they would any other court-awarded judgment.

So what does this have to do with litigation financing and pre settlement funding? Just this. People that you work with in pre settlement funding situations are victims of torts, not contract disputes. So there is no arbitration provision. And the result is that they are involved in the long, slow and tedious civil "justice" system (hahaha).

Torts are injuries one person does to another. They fall into categories like negligence, or intentional acts. But the parties in a tort don't have any sort of contract with each other. If you hit my car and it's your fault, that's a tort. If I buy a dog polisher that you are selling, and it makes my dog's fur all fall out, that is a tort. Product liability, to be exact. There are lots of torts and the fact is that in many if not most cases, the person who is injured or hurt is really a victim of someone else's stupidity or negligence.

And if you are advancing that victim some cash, you are helping them get by until they can get some sort of settlement. It's a good thing all around.