Investing in other people’s litigation

The Feb. 8 issue of Forbes alerts readers to a strange and troubling new phenomenon: litigation investing. Companies like Mighty provide "investors" (more accurately: gamblers? loan sharks?) the opportunity to make loans to plaintiffs to help them while their lawsuit is pending, with repayment contingent on success.

Some problems: First, interest rates are predatory — upwards of 30% most of the time, reports Forbes. So it's not exactly a great opportunity for the plaintiff. The Forbes piece recounts the story of one plaintiff who received multiple "investments" and ended up get hounded even in bankruptcy. Second, will gambling on other peoples' lawsuits taint the judicial process? What if one of the "investors" knows a juror?

Read more from Forbes here. Above the Law also has this interview with Mighty's founder.

(HT: Dan Brown.)

0 thoughts on “Investing in other people’s litigation

  1. Scott Michelman says:

    After I wrote this post, the folks at Mighty got in touch with me and asked me to change the characterization of these “loans” to “investments.” It’s hard to know quite what to call them; they have some characteristics of a loan (for instance, an interest rate), but the money need not be repaid if the plaintiff loses the case.
    In fairness, I think interested readers should check out Mighty’s perspective on the service they offer:

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