Preview Newsletter
Ethicon 5/29
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Boston Scientific Ordered to Pay $100 Million Over Mesh
May 28, 2015 | Bloomberg
By Jef Feeley
Boston Scientific Corp. must pay $100 million to a Delaware woman who blamed the company’s vaginal-mesh inserts for leaving her in constant pain and unable to have sex, in the first verdict after the company agreed to begin settling cases over the devices, and the biggest yet. -
Boston Scientific Hit With Record $100M Verdict In Mesh Case
May 28, 2015 | Law360
By Jody Godoy
A Delaware jury awarded $100 million to a woman who sued Boston Scientific Corp. over injuries from the company's pelvic mesh on Thursday in the biggest win yet over the medical implant that has elicited thousands of injury lawsuits. -
UPDATE 3-Boston Scientific ordered to pay $100 mln in transvaginal mesh trial
May 28, 2015 | Reuters
By Jessica Dye
...Boston Scientific is among seven manufacturers that collectively face an estimated 100,000 lawsuits over transvaginal mesh devices in U.S. federal and state courts. Other major defendants include Johnson & Johnson 's Ethicon unit, and C.R. Bard... -
Report: Boston Scientific loses $100m pelvic mesh case
May 28, 2015 | Mass Device
By Brad Perriello
A Delaware state jury issued a $100 million judgment against Boston Scientific (NYSE:BSX) today in a personal injury lawsuit filed over its Pinnacle and Advantage Fit pelvic mesh products, Bloomberg reported. -
Del. woman wins $100 million in transvaginal mesh case
May 28, 2015 | Delaware Online
By Jessica Masulli Reyes
A Delaware jury has ordered a medical device manufacturer to pay $100 million to a Newark woman who, despite two surgeries, still has pieces of transvaginal mesh painfully embedded inside her. -
*New** Jury Awards Plaintiff $100 Million in Boston Scientific Pelvic Mesh Trial
May 28, 2015 | Mesh Medical Device News Desk
By Jane Akre
That is the amount a Delaware jury today awarded to mesh-injured woman Deborah Barba. The amount includes $25 million in compensatory and $75 million in punitive damages, established to send a message to the company. -
Lawsuit Financing: What You Need to Know Before You Borrow
May 28, 2015 | Mesh Medical Device News Desk
By Jane Akre
Mesh News Desk editor, Jane Akre interviewed Mark Bello of Lawsuit Financial Corp of Farmington Hills, Michigan.
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Online Sources
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Boston Scientific Ordered to Pay $100 Million Over Mesh
May 28, 2015 | Bloomberg
By Jef Feeley
Boston Scientific Corp. must pay $100 million to a Delaware woman who blamed the company’s vaginal-mesh inserts for leaving her in constant pain and unable to have sex, in the first verdict after the company agreed to begin settling cases over the devices, and the biggest yet.
A state-court jury in Delaware found Thursday that Boston Scientific’s Pinnacle and Advantage Fit inserts, built to buttress sagging organs and treat incontinence in women, were defectively designed and company executives hid the flaws from Deborah Barba.
The 51-year-old former bank teller contends the inserts eroded once they were implanted, leaving her with a scarred vagina and a host of medical problems.
The jury also found Boston Scientific engaged in fraud by failing to alert doctors to the devices’ faulty design. It awarded $25 million in compensatory damages and hit the company with a $75 million punitive-damages award.
The verdict is the largest so far against Boston Scientific over its vaginal-mesh inserts, eclipsing a $73 million award last year to a Texas woman over the company’s Obtryx sling. It ranks eighth among U.S. jury verdicts in 2015, according to data compiled by Bloomberg.
It’s the first since Marlborough, Massachusetts-based Boston Scientific agreed last month to pay $119 million to resolve about 3,000 lawsuits over the devices in the first settlements of claims that the inserts damaged women’s organs and made sexual intercourse painful.Appeal Planned
Kelly Leadem, a Boston Scientific spokeswoman, said the company disputes the conclusion that the inserts were flawed and caused Barba’s injuries.
“We disagree with the jury’s finding and intend to appeal based on the strength of our evidence,” she said in an e-mail.
The verdict is surprising because it came in Delaware, the most corporate-friendly state in the nation, Erik Gordon, a professor at the University of Michigan’s business and law schools who teaches classes on how drugs and medical devices are developed and regulated, said by e-mail.
“Corporation-friendly Delaware juries rarely award punitive damages,” Gordon said. “A good portion of Delaware’s economy is driven by its business of domiciling most of the country’s largest corporations.”
Delaware, the corporate home to more than half of the U.S.’s publicly traded companies and 63 percent of Fortune 500 firms, had more than 1 million legal entities incorporated in the 900,000-resident state by 2012, officials said.‘Loudly, Clearly’
“The jury spoke loudly and clearly that Boston Scientific’s defective devices injured Mrs. Barba and many other women and they should step and take responsibility for causing that harm,” said Fred Thompson, one of her lawyers.
The U.S. Food and Drug Administration ordered Boston Scientific, Johnson & Johnson and more than 30 other vaginal-implant makers in 2012 to study rates of organ damage and complications linked to the devices after the companies faced a wave of lawsuits over them.
Women such as Barba allege that inserts produced by Boston Scientific and other companies are made of substandard materials and shrink once they are implanted, causing organ damage and persistent pain. J&J moved in June 2012 to pull four lines of inserts off the market.
Many of the more than 70,000 mesh-insert cases have been consolidated before U.S. District Judge Joseph Goodwin in Charleston, West Virginia. Others have been filed in state courts in Delaware, New Jersey, Missouri, Texas and California.Settlement Talks
Goodwin has been pushing manufacturers to consider settling the cases before they face billions in jury awards.
Boston Scientific, C.R. Bard Inc. and other makers of vaginal inserts had talks two years ago about creating a global settlement of cases over the devices, according to people familiar with the discussions. J&J, which refused to participate in 2013 settlement talks, has now begun to settle some cases.
While Boston Scientific and Bard couldn’t agree on an overarching settlement program, both companies have begun to settle some individual suits and some lawyers’ inventories of cases.
Boston Scientific agreed to pay the $119 million to resolve nearly 3,000 cases collected by a group of plaintiffs’ lawyers led by Houston litigator David Matthews in April. The settlement provided an average payout of about $40,000 per case.
The company rose 37 cents, or 2 percent, to $18.36 at 3:26 p.m. in New York Stock Exchange composite trading.
The Delaware case is Barba v. Boston Scientific Corp., CA 11C-08-050-MMJ, Superior Court of Delaware (Wilmington).
(A previous version of this story corrected Barba’s age and the split between compensatory and punitive damages.)
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Boston Scientific Hit With Record $100M Verdict In Mesh Case
May 28, 2015 | Law360
By Jody Godoy
A Delaware jury awarded $100 million to a woman who sued Boston Scientific Corp. over injuries from the company's pelvic mesh on Thursday in the biggest win yet over the medical implant that has elicited thousands of injury lawsuits.
Boston Scientific will have to pay $25 million in compensation and $75 million in punitive damages after a jury found in a plaintiff's favor for negligence and fraud claims, among others, over the medical device company's transvaginal mesh products. (Credit: AP)
Boston Scientific will have to pay plaintiff Deborah Barba $25 million in compensation and $75 million in punitive damages after the jury found in her favor for negligence, breach of warranty, fraud and Delaware consumer protection law claims over the medical device company's transvaginal mesh products.
"I would hope that this verdict would get the attention of the decision makers at Boston Scientific and that they would do the right thing by these women instead of forcing them to lay bare the most private parts of their lives in court," Fidelma Fitzpatrick of Motley Rice LLC, who represents Barba, told Law360.
Barba had surgery in May 2009 to implant the company's Advantage Fit and Pinnacle mesh products to treat pelvic organ prolapse and urinary incontinence. Afterwards, she suffered serious complications that required two surgeries, her attorneys say.
Barba initially sued the doctor who performed the procedure for malpractice in August 2011, but dropped those claims and instead filed suit against Boston Scientific in January 2012.
She accused the company of negligent product design, negligent manufacturing, failure to warn, breach of implied warranty of merchantability, fraud, fraud by concealment, violations of Delaware consumer protection law and loss of consortium.
The jury found in favor of Barba on all but the loss of consortium claim.
The plaintiff had initially alleged breach of express warranty and breach of implied warranty for a particular purpose, but dropped those claims before the jury trial.
"We strongly disagree with the jury's finding and intend to appeal based on the strength of our evidence," a Boston Scientific spokesperson told Law360 in a statement. "At Boston Scientific, patient safety is of the utmost importance and we dedicate significant resources to deliver safe, high-quality products."
In a motion for summary judgment just before the May trial, Boston Scientific argued that Barba had not adequately backed her claims.
The company said that it was not negligent in design of the products, as it had run them through a battery of tests to make sure they were functionally the same as earlier mesh products that had been proved safe and followed federal regulations regarding their design.
Boston Scientific had also argued the plaintiff failed to show a connection between alleged manufacturing defects and the harms she suffered.
On the failure to warn claim, the company said that it had adequately warned Barba's doctor, who had performed procedures using mesh products for more than 10 years.
According to Fitzpatrick, the award was the largest in a pelvic mesh case to date and the fourth verdict in a row for plaintiffs against Boston Scientific.
Fitzpatrick said her client was "brave" to take the stand on injuries of such a private nature and that Barba did so not only for herself but for other women who have been affected by allegedly defective vaginal mesh products.
According to Fitzpatrick, one of the defenses raised by Boston Scientific was a claim that Barba was injured because she had violated restrictions on lifting objects five weeks after her surgery.
"I don't think think these are cases where juries are inclined to be influenced by a blame-the-victim defense," Fitzpatrick said.
Counsel for Boston Scientific did not reply to requests for comment.
The plaintiff is represented by Fidelma Fitzpatrick and Fred Thompson of Motley Rice LLC and Philip T. Edwards of Murphy & Landon.
The defendant is represented by Colleen D. Shields of Eckert Seamans Cherin & Mellott LLC and Matthew D. Keenan and Eric Anielak of Shook Hardy & Bacon LLP.
The case is Deborah Barba v. Boston Scientific Corp., case number N11C-08-050 MMJ, in the Superior Court of the State of Delaware in New Castle County. -
UPDATE 3-Boston Scientific ordered to pay $100 mln in transvaginal mesh trial
May 28, 2015 | Reuters
By Jessica Dye
n">A Delaware jury on Thursday ordered Boston Scientific to pay $100 million to a woman who said she was injured by transvaginal mesh, a device that is the subject of more than 25,000 lawsuits against the company.
Jurors awarded Deborah Barba $25 million in compensatory damages, and an additional $75 million in punitive damages, according to lawyers for Barba.
The 51-year-old Newark, Delaware-resident was implanted with Boston Scientific's Pinnacle and Advantage Fit mesh products in 2009, to treat pelvic organ prolapse and stress urinary incontinence, according to her 2011 lawsuit. The devices caused serious complications, she said, and despite two subsequent surgeries to try to fix the problems, parts of the devices are still in her body, continuing to cause pain.
Following a two-week trial, jurors deliberated for about seven hours before finding Boston Scientific had been negligent in designing and making the devices and that it had failed to warn patients and doctors about potential risks.
Fidelma Fitzpatrick, one of Barba's lawyers, said Thursday that mesh complications had "profoundly changed" Barba's life, and that she hoped the size of the verdict would persuade Boston Scientific and other mesh makers to settle the remaining cases.
A Boston Scientific spokeswoman said the company strongly disagreed with the verdict and intends to appeal.
Thursday's verdict is the largest one yet in litigation over transvaginal mesh devices against Marlborough, Massachusetts-based Boston Scientific or any other mesh manufacturer. The company announced last month it had reached agreements to pay about $119 million to resolve 2,970 cases about transvaginal mesh.
The verdict is the sixth so far against the company by women who say that the devices are poorly designed and use subpar materials, resulting in painful physical injuries such as bleeding, infection and pain during sex. Boston Scientific has denied that the products are defective or that it failed to warn about potential complications.
Last year, Boston Scientific won the first two trials against it, before losing three in a row, including a $73.4 million verdict for a woman in Texas, which was later reduced to $34 million, and back-to-back trials involving groups of four women in West Virginia and Florida.
Boston Scientific is among seven manufacturers that collectively face an estimated 100,000 lawsuits over transvaginal mesh devices in U.S. federal and state courts. Other major defendants include Johnson & Johnson 's Ethicon unit, and C.R. Bard.
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Report: Boston Scientific loses $100m pelvic mesh case
May 28, 2015 | Mass Device
By Brad Perriello
A Delaware state jury issued a $100 million judgment against Boston Scientific (NYSE:BSX) today in a personal injury lawsuit filed over its Pinnacle and Advantage Fit pelvic mesh products, Bloomberg reported.
The jury found that the devices, used to treat pelvic organ prolapse and female urinary incontinence, were defectively designed and that company executives hid the flaws from plaintiff Deborah Barba, according to the news service.
It's the 1st verdict since Marlborough, Mass.-based Boston Scientific last month agreed to pay $119 million to settle some 2,970 pelvic mesh lawsuits. It's also the largest, topping the nearly $74 million awarded to Martha Salazar in Texas last September.
The jury in the Barba case also found that Boston Scientific committed fraud by failing to alert doctors to the devices' faulty design, awarding $75 million in compensatory damages and $25 million in punitive damages, according to the news service.
"We disagree with the jury's finding and intend to appeal based on the strength of our evidence," spokeswoman Kelly Leadem told Bloomberg in an email.
"The jury spoke loudly and clearly that Boston Scientific's defective devices injured Mrs. Barba and many other women and they should step and take responsibility for causing that harm," Barba lawyer Fred Thompson said.
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Del. woman wins $100 million in transvaginal mesh case
May 28, 2015 | Delaware Online
By Jessica Masulli Reyes
A Delaware jury has ordered a medical device manufacturer to pay $100 million to a Newark woman who, despite two surgeries, still has pieces of transvaginal mesh painfully embedded inside her.
Deborah Barba, 51, was awarded $25 million in compensatory and $75 million in punitive damages on Thursday following a two-week trial in Superior Court in Wilmington.
The verdict is the largest against Boston Scientific over the transvaginal mesh inserts. It surpasses a $73 million award in September for a Texas woman.
Barba had transvaginal mesh inserts, a net-like product used to treat incontinence and sagging pelvic organs in women, implanted in May 2009. Since then, she has had painful complications, including urinary tract infections and pain during sex, according to court documents.
“While difficult to share, I hope my case demonstrates to all mesh manufacturers the dangers of their products and the justice they owe victims,” Barba said in a statement through her attorneys.
The jury found that Boston Scientific failed to warn doctors and patients of the risk of the poorly designed inserts.
Kelly Leadem, a spokeswoman for the Massachusetts-based company, defended the company, saying it dedicates significant resources to ensuring products are safe.
“We strongly disagree with the jury’s finding and intend to appeal based on the strength of our evidence,” she said in an emailed statement to The News Journal.
Thursday’s verdict is the latest in ongoing litigation over the inserts.
Nearly 70,000 lawsuits were filed by women injured by the inserts in U.S. District Court for the Southern District of West Virginia. Additional lawsuits are pending in other states.
Boston Scientific announced last month it would settle nearly 3,000 of those lawsuits by paying $119 million.
Fred Thompson, an attorney for Barba, said in a statement that Thursday’s verdict will send the message to Boston Scientific and other companies about the dangers of transvaginal mesh.
Barba’s other attorney, Fidelma Fitzpatrick, agreed, saying Boston Scientific and other mesh manufacturers should “take note of this verdict and resolve all pending cases swiftly.”
“Deborah’s case will hopefully bring more awareness of mesh issues, however, no woman and her loved ones should have to endure the stress of going to trial and baring their souls publicly to achieve justice,” Fitzpatrick said.
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*New** Jury Awards Plaintiff $100 Million in Boston Scientific Pelvic Mesh Trial
May 28, 2015 | Mesh Medical Device News Desk
By Jane Akre
$100 million in damages.
That is the amount a Delaware jury today awarded to mesh-injured woman Deborah Barba. The amount includes $25 million in compensatory and $75 million in punitive damages, established to send a message to the company.
The 51-year-old from Newark, Delaware, sued manufacturer Boston Scientific for her permanent and serious injuries caused by the company’s Advantage Fit and Pinnacle transvaginal meshes. She was implanted in 2009 and has suffered significant complications and endured two surgeries that did not fully remove the devices.
Fidelma Fitzpatrick, Motley Rice
“While we are extremely pleased with this verdict and the relief we hope it will bring to the Barbas for Deborah’s unspeakable suffering, we also hope Boston Scientific and other mesh manufacturers take note of this verdict and resolve all pending cases swiftly. Deborah’s case will hopefully bring more awareness of mesh issues, however, no woman and her loved ones should have to endure the stress of going to trial and baring their souls publicly to achieve justice,” said Barba’s attorney Fidelma Fitzpatrick of the Motley Rice law firm.
The jury found Boston Scientific was negligent in its design and manufacture of the Pinnacle and Advantage Fit devices and that the warnings were insufficient to unsuspecting doctors and their patients.
“I am thankful for the jury’s verdict and hope my story can help other women who are suffering from mesh complications to receive the resolution they deserve,” said Deborah Barba. “While difficult to share, I hope my case demonstrates to all mesh manufacturers the dangers of their products and the justice they owe victims.”
The case is Deborah Barba v. Boston Scientific Corporation, Superior Court of the State of Delaware in and for New Castle County, C.A. No. N11C-08-050 MMJ.Boston Scientific has seen some of the highest jury awards to plaintiffs in its pelvic mesh cases, most notably, Martha Salazar who was awarded $73 million in a Dallas courtroom last September. That amount was later reduced under Texas caps on jury awards. Last November, two multi-plaintiff cases resulted in $18.5 and $26.7 million jury awards against Boston Scientific with a finding the mesh products were defectively designed.
Your editor spoke with Fidelma Fitzpatrick within the hour of the verdict. Also a call was placed at 1:45 pm to Boston Scientific for its comment, with no response as of this evening. Bloomberg reports Boston Scientific denies its product caused her injuries and plans an appeal. Also the verdict came down in Delaware the most corporate-friendly state as it’s the home of more than half of publicly traded companies. MND has requested another response from BSX this evening.
According to Fitzpatrick, this is the first time a retropubic sling has been found defective! That is signifigant because most trials have focused on larger meshes used for POP repair, ie mesh kits, or transvaginal mesh placed through the obturator space.
The trial began May 11 with jury deliberations beginning Tuesday. The jury of 12 was made up of five African-Americans and had slightly more men than women. Their decision was unanimous.
The Material Safety Data Sheet (MSDS) was one piece of compelling evidence shown to the jury. The MSDS is supplied by the polypropylene resin maker, in this case Phillips Sumika and goes to anyone who buys the raw material. It clearly states the resin is not to be used to make implantable medical devices. Boston Scientific proceeded anyway to do just that.
Fitzpatrick says the company began monitoring complains with the Pinnacle in January of 2008. Earlier studies had indicated what complication rate to expect, but when complications came into the company at a rate six times higher than predicted, instead of recalling the product, sending a warning letter to doctors or to the FDA, the company did nothing.
Boston tried to blame Deborah Barba and blame the implanting surgeon, everyone but accepting any blame themselves, says Fitzpatrick who continues, “We are thrilled for Ms. Barba. She was so strong and courageous going through this. We are honored she trusted us to tell her story we hope, and Debbie hopes, this will make a difference for all women out there. She feels a lot of kinship and compassion for their suffering.”
Ms. Barba’s complications continue, the result of scar tissue that remains behind after an unsuccessful explant surgery.
Fitzpatrick worked alongside Fred Thompson of Motley Rice and co-counsel, Phil Edwards of Murphy and London, a law firm in Delaware. #
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Lawsuit Financing: What You Need to Know Before You Borrow
May 28, 2015 | Mesh Medical Device News Desk
By Jane Akre
Mesh News Desk editor, Jane Akre interviewed Mark Bello of Lawsuit Financial Corp of Farmington Hills, Michigan.
Mr. Bello provides MND readers with some solid information they need to understand before reaching out to seek funding to make ends meet in advance of a expected lawsuit settlement. Yes, funding in advance of a settlement is risky business, but with information comes empowerment.
There are many misconceptions about the field of lawsuit funding. Hopefully, this interview will shed some light on the issue.
Mark Bello
Mark M. Bello 877-377-SUIT (7848)
Lawsuit Financial Corp. LLC
Farmington Hills, Michigan
http://www.lawsuitfinancial.com/about-us.htmlAkre Q: Let’s talk about the 800 pound gorilla in the room. Some lawsuit “lending” companies are often accused of being “predatory.” Why is that? What makes you different?
“There are many different ways to define “different”. My first comment is to quarrel with the use of the term “lending” in conjunction with a lawsuit funding transaction. This is a misnomer because lawsuit funding transactions are not “loans”. A “loan” requires an “absolute obligation to repay” in almost every jurisdiction in America. With lawsuit funding, there is no absolute obligation to repay; the funding is excused if the lawsuit is unsuccessful. There is no hard collateral, just a lien on a case that may or may not be successful. Many lawsuit funding companies differ In terms of policies and rates and lawsuit funding can certainly be expensive because of the extraordinary risk being taken. When a funder’s capital is at risk in a pending lawsuit, it should not be a surprise to anyone that these transactions trend on the expensive side.”
Q: When you hear that term ‘predatory lending’ does it make you cringe?
“I confess that I am a little tired hearing it all the time. The use of that term exhibits a lack of understanding of what lawsuit funding companies do. A “predatory lender” charges excessive interest rates even when it receives hard collateral in return for the loan. A person who has spotty credit may apply for a credit card, a car loan or a mortgage. His bank accounts can be subject to lien, his wages garnished; his car or home can be repossessed. So, why charge excessive interest? The lender has solid, proven ways of assuring its principal and profit return.
Lawsuit funding companies must, for repayment, by contract, look only to the cases they have funded. All other assets of the person seeking the funding are irrelevant. A person can have significant assets but be cash poor and the lawsuit funding company can’t touch a single asset. Companies like mine lien cases and only cases. If a case is successful, our principal and profit is paid; if the case is unsuccessful, we lose our money. Not only are we not “predatory”, we are not “lenders”. What we do does not fit the commonly understood, legal definition of a “loan”. That we charge high rates for the risks we take does not make us “predatory”. We must offset losses with the profit we make on wins. And, there is much uncertainty; we get involved in cases that are handled by lawyers we hardly know, and for clients we have never met. If the case fails, we forgive it all. It should shock NO ONE that a transaction with this much risk can be expensive. Lawsuit funding, in general, trends on the expensive side; the client should be made aware of that going into the transaction. I am a full disclosure kind of guy.”
Q: Do you recommend that clients seek lawsuit funding in smaller increments, and only in certain circumstances?
“Absolutely. It’s certainly wise to err on the side of smaller versus larger and, with my company, a plaintiff is not limited to just one advance. If a client needs $10,000 because her lawyer has advised that settlement is 10 months away and the client is short of making ends meet by approximately $1,000 a month, that client is far better off seeking $1,000 a month then $10,000 all at once. There are two very important reasons this is true: 1. Profits in lawsuit funding transaction accumulate over time. Thus, advances occurring closer to settlement time will be cheaper than those provided earlier. 2. Just because the lawyer predicts that the case will take 10 months to resolve doesn’t mean that his prediction will be accurate. If the case settles in six months, the client didn’t need the rest saving the client a lot of money. Some companies don’t tell people that.
I would encourage people to ask the lawsuit funding company whether or not they can apply for more than one funding. Since profits are charged based on amounts advanced and the length of time the money is outstanding, it is common sense to seek multiple advances at smaller levels rather than one large advance. People seeking lawsuit funding should have serious needs, to save their house, save their car, pay tuition, feed their family, keep their lights and heat on. Funding should be used for important reasons; gifts or trips can wait until after the lawsuit is resolved. Lawsuit Financial operates that way; however, my sense is that many companies don’t ask the client why he/she is seeking funding and many companies don’t assess “need” rather than “greed”. I try to provide less rather than more and only fund in situations where the need is serious. My sense is that many lawsuit funding companies don’t operate that way.”
If we had a crystal ball and knew that a case would fail, paying off a credit card utilizing lawsuit funding would be a good thing. However, if the case is successful, the cost of lawsuit funding could (and in most cases will) exceed the cost of credit card debt. Thus, in the usual situation, it makes little sense to pay off a credit card. What DOES make sense is to use lawsuit funding to avoid falling behind on payments due, thus damaging your credit reputation. Bad credit can cause years of financial difficulty. Clients should be advised not to pay off car loans with lawsuit funding proceeds; use funding only to keep payments current.”
Q: Is it possible for the client to owe twice the amount advanced?
“Yes; and sometimes, even more than that. Lawsuit funding is a bet; if we lose the bet, we lose our money. If we win the bet, to stay in business, we must profit to an extent that pays off the bets we lose. Or, a consumer can look at it as an investment. Some investments are successful and some aren’t; if we pool our investments, we hope that the successful ones outpace and offset the unsuccessful ones. Otherwise, we are not profitable. The same is true with the speculative investing in or betting on the outcome of lawsuits. And, don’t forget, between success and failure in lawsuits, there is compromise.”
Scales of Justice, WikiCommons
Q: What do you mean by compromise?
“Compromise should occur when a lawsuit is successful, but not successful enough to pay the client his/her share of the recovery, the lawyer’s fees and advanced costs, and the principal and profit due a lawsuit funding company. Lawsuit Financial has an industry exclusive compromise provision in our contracts with our clients. If principal and profit exhaust plaintiffs’ recovery, we will compromise our returns. For instance, if a client owes $10,000 in principal and profit, and the net recovery to plaintiff is $10,000 after attorney fees and costs, we will provide a discount, so the client will walk away, not only with the money we provided to her earlier in the life of the case, but also with additional case revenue. Many companies will take the client’s entire recovery in situations like this. In their view, a contract is a contract. The client owes $10,000; there is enough money to pay funding and profit in full. We are entitled to the entire net case proceeds. At Lawsuit Financial, we don’t think that’s an appropriate result; the client is the one who has lived with serious injuries and had to fight with insurance companies in court, not us. Thus, we will provide a resolution appropriate compromise. As you can see, we take real risk in funding these transactions. Successes must offset failures and compromises.
Mesh cases and other multi-district, class action type litigation are excellent examples of the risks taken in providing litigation funding. Multi-district litigation has tremendous uncertainty both in time and outcome; thus, these transactions must trend on the expensive side. It could take three to four successes (both in time and money) to offset a single large loss or a protracted litigation length in a Mesh case. Somehow, losses and large time lapses have to be offset by successes. In the consumer money business, only a lawsuit funding portfolio operates that way. Remember, with a car loan or mortgage, the lender can repossess or foreclose if the borrower defaults; the lender, upon repossession, owns the asset and can sell it to satisfy the obligation. Only the plaintiff can own his lawsuit; a stranger cannot appear on his/her behalf or take it over. A lawsuit funding company cannot “own” or “repossess” the plaintiff’s case; we don’t get the kind of collateral a lender does. That’s what distinguishes lawsuit funding from lending. We advance money on speculative lawsuits and forgive the obligation if the case fails; there is no assurance that the obligation will ever be repaid.”
Q: Do you ever walk away with more than the client?
“I can’t speak for other funding companies, however, no; that is a result that can never happen with Lawsuit Financial. Between the amount that we advanced and compromises at the end when necessary, Lawsuit Financial would never participate in a result where our company walked away with more than the client walked away with.”
Q: What does a client need to ask before receiving an advance? Is your funding principal and profit contingent upon case outcome (is the advance excused if the case fails?)?What is the minimum profit charge and what is the maximum (if any)? (If the company refuses to cap the profits, run-as fast as you can-the other way!)Do you charge fees of any kind over and above profit and do you add these fees to the amount of the funding advance and charge interest on them? (If the answer is “yes”, run-as fast as you can-the other way!)
“Many companies ‘fee up’ (or “junk fee”) their contracts. They charge a host of fees: underwriting fees, shipping fees, application fees, wire fees, transaction fees, etc. Then, they roll these fees into your contract and the amount the client “received” in funding includes all of these fees. As profit begins to accumulate on the advance, it is also accumulating on these fees. Many companies won’t tell clients about these fees and how they increase the cost of funding on a monthly basis. A $1,000 contract could have between $500 and $750 in fees added to the funding amount. The effect of this is that the client has contracted for funding in the amount of $1,500 or $1,750 rather than the $1,000 actually paid to the client as “funding”. At Lawsuit Financial, we don’t apologize for the profit we charge, but we disclose it, verbally and in bold print on the front and third page (schedule) of our contract. We charge no junk fees (or fees of any kind). A telephone conversation with a client never terminates without the client understanding exactly what funding costs over the various stages of litigation and without getting our recommendation about funding strategies.
My professional staff is required to ask a client:What do you need the money for?
“Many companies don’t care why the client seeks funding. At Lawsuit Financial, we think that does a disservice to the client. If he/she is calling with a valuable case, likely to resolve successfully, seeking funding that trends expensive, a discussion of why the client needs the money (“need”, not “desire”) is an important conversation to have.
The client should also ask:If I don’t have the result expected and I owe you a lot of money will you guarantee a compromise?
I would be curious to see how others in this industry answer this question. Lawsuit Financial has a guaranteed compromise provision written in our contract. I believe that we are the only company in North America that offers, in writing, a compromise in a situation that warrants compromise. Lawsuit Financial is attorney-owned and operated. Many lawsuit funding companies are owned and operated by financial gurus. Ask the financial guy: “Does it bother you that your profit is being made but the client is getting nothing”? Many will say “no; the client took the same risk we took and we won.” Lawsuit Financial says that if the result was disappointing and the lawyer and the client are in financial pain at the end of the case, we should share the pain. That is the true definition of shared risk.”
Q: What type of lawsuit funding strategies should apply to Mesh cases?
“Well, Jane, you have indicated that Mesh cases have a potential value of $40,000 on the lower side of the ledger and up to $450,000 or so for the more serious cases, before legal fees are paid. Assuming those figures to be true, a client should look at funding, over time, in an aggregate amount that is less than $5,000.00. Funding should fit comfortably into potential case value so as not to over-burden the case. If funding profits double or even triple the advance provided, the amount due will be no more than 1/3 the settled value of the case. Err on the side of smaller is better. For a case in the $450,000 category, advances should be kept to levels around $25,000 to $30,000 over time. Again, all participants should desire that funding and profits be kept at levels lower than or equal to 1/3 of case value. Seek funding only in “absolute need” situations. By the way, one way to be “predatory” in the lawsuit funding business is to fund too much on the case. Funders should remember who is the seriously injured victim in these cases. Who has pained and suffered? Who has been waiting years for justice? Even though it is easy to put oneself in this position, a funder should not want own more than 1/3 of a client’s case proceeds. “Predatory” in the lawsuit funding business would apply more to over-advancing than it would to amounts of profit companies charge for risks they take in speculative litigation. Why would a company that could have easily avoided doing so want to own an amount of plaintiff’s lawsuit proceeds that exceeds the amount that the plaintiff herself will receive?” #
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