Laid up here at home with my stupid knee pounding, a commercial came on that seemed tailor made for someone like me.
“Are you laid up? Missing work because of an injury? We can get you CASH!!!” They never claim that they are a law firm and they never say why or how my injury can get me cash, but from the very little information given, I think this is an ambulance chasing H&R Block modeled law firm. The offer: “money up front, whether you win or lose your case!”
So, they’ll give me 500$ if I call them up and tell them I popped the ligaments in my knee at a bar and then they sue the bar on my behalf and keep the settlement if they win? Is this legal?
No, they can’t keep the entire settlement if they win. But they can deduct their expenses, including witness fees, any amount they advanced you, and their fee, which can be up to 33% of the settlement.
And the “money up front” business is not automatic, but happens only after they evaluate your case. They obviously won’t advance you a dime if your injury was caused by some judgement-proof homeless lunatic.
If the advertiser is a law firm, then there may be ethical constraints on “money up front.” Different jurisdictions apply different ethical rules, but the most common provision appears in the Model Rules of Professional Conduct, Rule 1.8(e), which most jurisdictions have adopted in substantially this form:
“A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that: (1) a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; (2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client; and (3) a lawyer may guarantee a loan reasonably needed to enable the client to withstand delay in litigation that would otherwise put substantial pressure on the client to settle a case because of financial hardship rather than on the merits, provided the client remains ultimately liable for repayment of the loan without regard to the outcome of the litigation and, further provided, that no promise of such financial assistance was made to the client by the lawyer, or by another in the lawyer’s behalf, prior to the employment of that lawyer by that client.”
While I don’t disagree with Bricker or brian, I think the commercial may not be for a law firm. Rather, it sounds to me like it’s for a private company which is in the business of purchasing claims.
In most circumstances you can sell your right to sue someone (it’s called subrogation, and it means that the guy who buys the claim has the same right to recover damages that you would have had if you sued on your own behalf).
It sounds to me like this company purchases the subrogation rights to injury claims, then sues the original tortfeasor (the person who injured you), hoping that they can recover more from him than they paid you for your right to sue. This can be a lucrative business if they don’t pay very much for claims. They can do this because they have funding to live on while the suit is in process, while the person injured, who may be missing work or incurring hospital bills, needs money today and is therefore willing to sell for a lot less cash-in-hand than she could get were she willing to hire a lawyer and wait the years that a trial might take. You’ll often see similar advertisements for other types of rights to payment in the future, where they company is willing to purchase them today for ready money and then collect as the payments come in over time. (I’ve seen them for non-lump-sum lottery winnings and unexecuted legal judgments, too.)
There’s not necessarily anything intrinsically illegal about this, although it may be a pretty sleazy operation. (If you think about it, it’s kind of a version of post hoc insurance.) Of course, if the company “analyzes” your claim and makes false statements about how likely you are to be able to win if you go to trial in order to negotiate a lower price, that could be fraud just as similar false statements about any product might be. There may also be local or state laws limiting or regulating the practice – indeed, I’d wager that this is pretty likely, given that these are exactly the types of schemes, if perpetrated fraudulently, that attract attention from the local news (especially since it seems likely to prey on the elderly, who are typically more susceptible to injury and also often on fixed incomes). However, assuming that the business complies with all applicable regulations and doesn’t do anything fradulent, it’s probably not otherwise illegal.
–Cliffy
P.S. I am no expert in this area of the law, I have very few facts about the case, and I am not licensed in your jurisdiction. If this post was motivated by anything more than idle curiosity, you should consult an attorney licensed in your jurisdiction, familiar with all the relevent facts, and expert in this subject matter. I am not competent to advise you in this matter. You are not my client. I am not your lawyer.