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Apr 19

Can you Kickstart justice?

Crowdfunding is the current go-to for anyone who needs to raise money.  From honeymoons to the world’s best potato salad, it seems like people will chip in toward anything that seems like a good idea.

So it’s no surprise that crowdfunding has reached the legal market.  If you’re cash-strapped but have a pretty good case against a big company, or, on the flip side, you’re a small company being sued by a competitor Goliath, the genius of crowdfunding can get the wheels of justice turning. 

There are a few different versions of judicial crowdfunding online.  Plaintiffs and defendants can post a case on Invest4Justice, and anyone can pitch in.  Either side can ask for donations, but plaintiffs can elect to or offer “rewards” if they win, such as two dollars for each dollar contributed.  Invest4Justice takes four percent to cover their operation costs, and allows up to 10,000 individuals to fund a single case. 

LexShares singles out commercial cases like intellectual property or antitrust suits that are already filed in need of between $100,000 and $1 million in capital.  LexShares then posts case details, the funding goal, and deadline.  There’s a “by request only” option for plaintiffs who want to vet contributors before revealing case details, and investors have to meet certain income requirements and FTC guidelines before being allowed to contribute.

This trend in litigation can be a godsend. A solo practitioner with only a few years of practice may have a once-in-a-lifetime case against a well-funded defendant that might be just too expensive to finance himself.  A high-tech startup could find itself at the receiving end of a lawsuit brought against them by a huge competitor for something like patent infringement that, in the past, would have sunk them.  But by bringing its case to a crowdfunding site, a small company now has access to enough money to pursue justice instead of drowning.

While litigation funding can be a great jumping-off point for small law practices or companies, there are a few hazards.  There’s no guarantee that your investment goal will be met, and a win means that your client will walk away with less money after the investors’ cut from the client’s winnings.  Lawyers should also look out for potential fee splitting issues, outside influences on their case, and protecting attorney-client privilege.  But for the right case and the right situation, the new trend of litigation crowdfunding will only expand the public’s access to justice.