Legal IT Futures: Litigation Funding – can New York start-up LFC change the market?
With litigation funding in the news in the UK following what The Lawyer magazine describes as “the Excalibur fiasco” and the Association of Litigation Funders struggling to bring some order to the market, it is interesting to see a US technology start-up went live last month with the aim of streamlining the litigation funding process for law firms, funders and claimants alike.
At the end of February, New York City-based technology startup Legal Funding Central (LFC) announced its public launch of what is claimed to be the first website to leverage proprietary technology in order to streamline the legal funding process for law firms, litigation funding companies and plaintiffs seeking funding.
Legal funding, also known as litigation funding or legal finance, is when a plaintiff sells a small part of his pending lawsuit to a third party funder in exchange for an investment in the outcome of the case. Legal Funding offers litigants liquidity and financial flexibility, allowing them to avoid a premature, suboptimal settlement. Already popular Australia – but rather more problematic in the UK – legal funding has quickly become a rapidly growing industry in the United States, with some funders raising in excess of $100M to invest in various types of legal cases.
As legal funding becomes increasingly prevalent, law firms find themselves devoting considerably more time and expense towards helping clients obtain funding. Since most litigants submit requests to multiple funding companies (sometimes dozens), attorneys and their staffs can be thrust into the logistical aggro of having to fulfill requests for the same case information over and over again.
LFC’s new free web platform (hosted on a secure cloud-based server) is focused primarily on eliminating inefficiencies in the legal funding workflow for attorneys and their staffs. LFC does not invest in cases itself, and its technology supports various types of legal funding cases, such as personal injury, commercial, patent, and divorce.
On LFC, an attorney or paralegal spends 10 minutes creating a standardized legal funding case file by filling out key information and uploading documents based on the type of case. LFC hosts the case file on its secure cloud-based server, and then instructs plaintiffs to send legal funding companies directly to legalfundingcentral.com. As long as funding companies have been given the proper authorization information, they can review the plaintiff’s protected case file and make a decision without ever contacting the law firm.
“We kept hearing the same thing from attorneys and paralegals: legal funding is important to our clients but I wish I didn’t have to deal with it,” says LFC co-founder Dylan Beynon. “There are a million ways that technology can improve legal funding, and I believe we’ve taken the first major step by removing bottlenecks that law firms and funding companies struggle with.”
Beynon says his company’s “white glove treatment” differentiates it from the competition by providing live phone and email support to plaintiffs who need extra help, facilitates requests for additional information by funding companies, as well as supporting fax and email submissions from law firms wanting help uploading case information to LFC’s website.
LFC has already moved beyond New York into other US states, with both Canada, Australia and the UK potential future targets. Beynon admitted to the Insider that he “hadn’t yet nailed the business model” but was confident that, along with rolling out additional business services, if the company’s platform could save users time and money, the route towards monetisation would be open”.