A new legal-funding site launched this month with the goal of connecting plaintiffs in civil litigation with investors who compete to advance them a small portion of any future settlement or award.

mightyCalled Mighty, the company formally announced the launch of its online funding marketplace on Sept. 16, after having recently raised $5.25 million in Series A funds.

The purpose is to help plaintiffs bridge the gap between the time they file a lawsuit and they time they reach a resolution by providing funding to help them meet medical and living expenses. Once a plaintiff applies for financing, investors submit competing offers and the plaintiff chooses the one that seems best. (The plaintiffs’ attorney must also sign off on the loan.)

All financing through Mighty is structured as a non-recourse investment, meaning that if a case fails to recover, the plaintiff owes investors nothing. From the website:

Because our funding takes the form of a non-recourse investment, you will never owe a dollar to investors if your case loses. Our investors understand that they are investing in your case. They only win if you win.

The company’s standard contract is posted on its site.

Plaintiffs must already be represented by an attorney before applying for financing on Mighty. Investments start at $500 and the average financing is $5,000, the company says. The money can be used only for living and medical expenses.

The company seeks to recruit individuals who are accredited investors with legal expertise to serve as investors. Investors can invest in multiple cases and build a portfolio. The site promises investors “high-yield” returns “free from stock market volatility.”

When a case is successfully concluded, Mighty charges the investor a fee that is variable based on the amount of the investment.

For lawyers and law firms, Might offers to work closely with them to simplify the process of obtaining plaintiff financing. It says that it provides firms with a dedicated point person to work with them and that it keeps both the firm and plaintiffs informed through an online dashboard and text-message updates.

  • Bob H / Law Kansas

    From the plaintiff’s standpoint, this sounds like a great idea. Does anyone forsee any ethical issues or challenges in the future ??

  • avon

    Bob H, in NY I’d be concerned about clients’ medical and legal confidentiality (and, about counsel’s settlement-negotiating leverage) due to the final bit of LawSites’ information:
    “it keeps both the firm and plaintiffs informed through an online dashboard and text-message updates.”

    I like the concept, but I’d wonder how to avoid possible pitfalls, such as that confidentiality and about who will control – and who will judge – whether the investor’s interest in the case could imply some variation on fee-splitting or could implicate the client’s counsel’s duty to advise the client prudently as to the prudence of the bidding investors’ percentage or otherwise-structured compensation. A lawyer would have to do a lot of thinking, and a lot of details about Mighty’s process would have to be available and duly considered.

    • Bob Ambrogi

      You raise good points. I suspect the site’s backers would be willing to give you more details about how they handle these issues.

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