Are you or a client looking for capital to litigate a tortious claim? Tempted by the unfair, low-ball offer because the coffers are dried up? Fret no more–legal startup Mighty hopes to take the chance out of litigation.
Crowdfunding has been around for a while, and innovators are always looking for new ways to capitalize on easy accessibility to the public’s wallets. Two weeks ago, JOLT examined the problems posed by crowdfrauding. From high-tech party coolers to the Reading Rainbow book campaign, crowdfunding has helped some unique projects get off the ground. Traditional crowdfunding websites are structured around donations, allowing interested citizens to donate money to projects they find interesting. Our article from two weeks ago expertly identified some of the problems posed by a donation-based model. Today, a few companies are trying to transcend some of the barriers posed by such a model.
One example is equity crowdfunding. In the JOBS Act of 2013, Congress attempted to legalize equity crowdfunding, by allowing private companies seeking investment to advertise online and to allow the general public to participate in equity crowdfunding. Rather than simply donating to new companies in exchange for the ultimate product, participants in equitable crowdfunding would receive a share of the company for their money. Traditionally, entrepreneurs could only solicit funds from accredited investors (those with a net worth greater than $1 million). Today, equity crowdfunding is fully functional and has raised an estimated $250 million for start-ups as of March of this year.
The crowdfunding revolution does not stop there. Legal start-up ‘Mighty’ has taken the crowdfunding model to a new frontier: funding plaintiffs’ fees.
“Mighty is a new kind of platform that empowers plaintiffs to get a better deal from the justice system. Plaintiffs get financing today for a portion of their future settlement, so they can pay for rent, medical bills, and other essential living expenses. Because we think everyone deserves justice not just those who can afford it.”
Mighty allows potential investors to peruse pre-vetted plaintiffs’ cases, review the facts, and make a nonrecourse loan offer to the plaintiff. Plaintiffs must already have a lawyer, while potential investors are screened before having access to plaintiffs’ cases. Investors supply money for the lawsuit and reserve a portion of the future settlement for themselves. The startup hopes to allow plaintiffs to avoid succumbing to unfair settlements because they are “desperate for cash.”
The new start-up touts itself as a “new kind of financial marketplace” allowing investors with legal expertise to invest in high-yield returns based on their own knowledge of the law and likelihood of a particular plaintiff’s case to win. The plaintiff’s contract with Mighty is available online.
Looking forward, Mighty presents itself as an excellent opportunity for plaintiffs who may not otherwise have access to funding the ability to fully litigate their claims. The company hopes to help connect plaintiffs with financing quickly, with a standard contract that attempts to balance both the interests of the investor and the plaintiff. By structuring debts as nonrecourse loans, the website guarantees that plaintiff’s will not find themselves liable if they lose their case. The site also promises to help plaintiffs’ lawyers and firms by providing quick and easy access to funding for their plaintiffs. Mighty helps bring the plaintiff, the firm, and the funding together quicker and easier.
The Mighty team has 22,000 cases and $20 million worth of plaintiff funding experience under their belt already. The website launched in the middle of September and will be interesting to follow in the coming months to see what types of cases the website is able to help and whether it will attract a significant amount of investors.
As it stands, Mighty is only available for accredited investors with legal experience, and potential investors are interviewed by the company. Financing starts at $500 and the average financing is $5,000 according to the website. While financing plaintiffs’ claims is certainly not a new invention, it remains to be proven if the accessible “crowdfunding” type model Mighty is built on will become a promising investing marketplace as the equitable crowdfunding has.
To learn more about them, visit mighty.com.