Is litigation funding a good market for you to pursue?

I love the show Boston Legal. Do you watch it? I do. And I have a lot of attorney friends. I have loved lawyer shows on television since Perry Mason (I’m dating myself here, I know).

Everyone loves those flashy trials that they show on television.

But in real life, most cases never get to court. Many get thrown out one way or another.

The remainder of the cases, some 2.7 million state cases, settle. Yes, the lawyers talk back and forth and agree on a number.

Most of the time, if the lawsuit isn’t bogus, the plaintiff (the victim bringing the lawsuit) should win something.

Making money from lawsuits

In the year 2000, people filed 15 million new cases. These were civil cases, filed in state courts. That doesn’t count what was filed in federal courts!

Of these 15 million cases, 2.7 million cases that either settled or went to trial. That’s a huge market for you to advance money in good lawsuits with a good chance to make a nice return.

You will be on the side that collects the money – but first make sure you have a lawsuit expert to help you sort the winning cases from the losers, in the first place. And, odds are stacked in your favor further — because the plaintiff’s attorney has already looked at the case and invested their own money in it.

You see, typically someone who has been hurt or injured will find a lawyer to bring the lawsuit for them. The plaintiff’s lawyer pays all the costs of litigation out of her own pocket. She gets her costs back plus about one third of the amount of the settlement or the amount that the court awards.

 As you can imagine, plaintiff’s lawyers hate to lose because they are losing their own money!

 On the other side, the defense attorneys usually work for a big insurance company or big organization. They prefer to settle if they can’t win.

So if a lawsuit is filed and if it has merit, chances are good that the lawsuit will settle in the plaintiff’s favor. Of course, a lot depends upon how good you are at funding cases that win…and there are experts that can help you with this. Make sure you have a very good expert on your side — that makes all the difference. It's like investing with Warren Buffett versus investing with Joe Blo. I would invest with Warren Buffett if I had the chance — I just feel my money would be safer with someone like Buffett on my side!

Of course, even Warren has an occasional loser. And there are no guarantees in this business either. But, it turns out…

…most litigation advances are profitable

In your litigation funding franchise business you advance money to the plaintiffs in litigation that has a high likelihood of settling in favor of the plaintiff.

As you can see, the plaintiff already had to find a lawyer to advance costs and put in her time to represent the plaintiff.

So if the case is any good, chances are that you, as a lawsuit funding franchise operator, will get your money back and then some from the plaintiff. Why? Because you will know how to spot good cases. And good cases have a tendency to win money. (Again, assuming that you have someone helping you who has the experience and expertise to identify the good cases, and keep you from making too many investments in losing cases.)

In other words, your risk/reward can be quite favorable, keeping in mind the need for an expert helping you.

And what about the reward?

To see that side of things, let’s look at the side that is paying out the settlement, the defense.

Defendants quite often are big insurance companies. If a car hits Mary, then the auto insurance company will be defending the lawsuit.

These big insurance companies don’t want to go to trial either. It is too expensive, and too unpredictable. So many if not most cases that have merit should settle before trial.

How to triple your chances of financial returns in litigation funding

If you are going to be in the business of advancing money to plaintiffs in litigation, you want to make sure the odds are stacked in your favor to the greatest degree possible.

First, you will want to make sure that an expert with a long track record looks at the case and tells you the plaintiff has a good chance to win.

Second, the plaintiff’s lawyer will be investing in the case too. Sure, lawyers make bad investments. But since the lawyer will be paying all the costs of litigation out of her own pocket, it bodes well for there being a good case.

Third, you can use investor’s money. Either alongside your own money, or just exclusively investor’s money. That way, if the case is lost, you are out only a little time.

But if the case is won, as often will happen at this stage, you will share some very nice profits along with the investor. You have still only put in a bit of time, but you can potentially make financial returns that are far in excess of what you would earn, on a per-hour basis, in many other lines of work.

Remember though that there may be high returns and this is for a reason: this can be a very risky business. You really had better know what you are doing!

(In a way, this is like a good hedge fund…and you know that hedge funds may have great returns but they also have some losses…so beware!)

Together, these three factors in my mind triple your chances of getting outstanding financial returns in the business of litigation funding.

But what about the downside? Every business has a downside to it. What are the hidden negatives with this business?

Click here to learn what nobody else will tell you — what's right AND what's wrong with litigation funding