Companies Investing In Malpractice Lawsuits: Good Or Bad?

According to a feature article in the New York Times, a new trend is developing in which personal investors, hedge funds, and banks are investing in lawsuits in order to make a profit. When injury victims do not believe they have enough money to fight large companies or to hire a high-powered legal team, they are now asking more powerful institutions to bankroll their lawsuit in exchange for a percentage of the profit.

Lawsuit loans in New York are now increasingly common when it comes to medical malpractice lawsuits, wrongful death lawsuits, divorce cases, dangerous product lawsuits, birth injury lawsuits, and class action defective drug lawsuits. Estimates say that about $1 billion is invested in lawsuits across America at any given time.

Why has this phenomenon begun? Experts say that there are two reasons: first and foremost, many have difficultly affording an expensive court battle, especially when fighting large corporations that are backed by large legal teams. Secondly, banks and other investors are recording impressive profits from putting money toward top attorneys and winning cases.

Some believe that this new trend in investing in lawsuits is not a good one. Investors can take too much control over a legal case with mixed results. In addition, investors often get a large percentage of money that should go toward plaintiff damages, money which is often needed for lost wages or ongoing medical costs. Also, some lawyers may not tell clients that money has been borrowed for the case, resulting in a number of possible complications. Finally, lawyers may try to resolve cases more quickly if their case is being bankrolled.

On the other hand, some experts believe that lawsuit investments give some injury victims a chance that they would not normally have: to successfully win their legal case with the help of top attorneys.