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Mighty is a new financing startup that lets people invest in personal injury lawsuits. The idea is that plaintiffs won't be forced to settle fast because they need cash and that investors will profit from damages awards for which plaintiffs held out. But is this a service that is really needed?
The company's website says, "Mighty's mission to empower plaintiffs to get a better deal from the justice system." Mighty balances the power dynamic between litigants, allowing plaintiffs to go to trial when they might otherwise have to settle, according to Tech Crunch. However, there are some disturbing aspects to this startup, and it is not entirely clear that the model used for arts and entertainment applies to the law.
Attorneys are not allowed to promise particular outcomes by law. Your lawyer can only try to win your case, but can never guarantee anything about a claim. This rule impacts the way attorney and clients are allowed to interact and it also impacts Mighty.
The service lends plaintiffs money for their cases, up to 10 percent of the value of their settlement's estimated value. But if a case is lost completely, clients or investees, owe nothing. Possibly as a result of this, the rate of return on loans made on Mighty is 20 to 30 percent annually, which is much higher than a traditional loan or credit card.
Investors decide which cases they want to put money into and they attract cases with their interest rates. But is this an ethical approach to lending and the law?
According to Tech Crunch, "While investments with APRs of around 30 percent may initially seem predatory, the fact is that this financing results in higher, fairer payouts for plaintiffs, with practically no risk of going into debt or bankruptcy."
The company and some media outlets covering it claim that Mighty levels the playing field of the law. How super high interest rates for injured plaintiffs levels the playing field is mighty mysterious to this counselor, however.
Many personal injury lawyers work on contingency, basically investing in their clients' cases and making their causes their own. Is Mighty suggesting that plaintiffs make their own decisions about settlement based only on money and not a professional assessment from their personal injury lawyer?
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