As anyone who has ever been in court knows, lawsuits are often a long, tedious process. This is especially true with lengthy personal injury litigation, during which the injured party is often unable to produce income. In such cases, life care planning becomes crucial for projecting the long-term medical and support needs of the injured individual. The role of life care planners in litigation is to provide expert assessments and detailed reports that help courts and attorneys understand the future costs associated with the injury.
Powerful defendants commonly take advantage of this, offering lowball settlements in hopes that the plaintiff will settle out of necessity for a quick payout. The result is an imbalanced legal system where injured plaintiffs are shortchanged, just because they don’t have the financial wherewithal to support themselves during a trial.
Enter Mighty, a startup hoping to level the playing field by helping plaintiffs raise the funds needed “bridge the gap between settling a lawsuit, and the costs of living through one.”
The New York-based plaintiff financing platform has recently raised a $5.25M Series A, and has just announced that users have invested over $1 million in plaintiffs since the company launched in December.
The average amount of funding on Mighty is $5,000, and a plaintiff can only finance up to 10 percent of their settlement’s estimated value. While deals are vetted by the startup, the ultimate decision to invest lies in the hand of the platform’s individual investors, which are often lawyers looking for an additional source of income.
Funding on Mighty is structured as a non-recourse investment, meaning that if a plaintiff loses a case, they don’t owe investors anything.
The platform itself is designed to be a a marketplace, meaning investors compete to attract plaintiffs by trying to offer the lowest interest rate. That being said, Mighty’s average interest rate hovers between 20-30 percent annually…much higher than a traditional loan or credit card.
However, it’s important to note that these rates are for non-recourse financing, meaning the higher rate is in return for a plaintiff not having to take on debt if a case is lost. Additionally, these loans are often the sole factor in allowing a plaintiff to hold out for a fair and larger settlement. This means that most borrowers end up making more money post-settlement by taking out a Mighty loan, even though it may be at a high interest rate.
While loans with APRs of 20-30 percent may initially seem predatory, the fact is that this financing results in higher, fairer payouts for plaintiffs, with practically no risk of going into debt or bankruptcy.
Ultimately, a platform like Mighty is good for the legal industry, and is another example of technology being used to level the playing field in a court of law.