When people sue over a personal injury they can wait years to see any sort of payout, even as they often suffer from a loss of wages or other financial distress.
Startup Mighty Group Inc., which raised venture funding this year, as VentureWire has learned, launched a marketplace where accredited investors compete against each other to provide a few thousand dollars to such plaintiffs to tide them over. Plaintiffs agree to return the money and a percentage only if and when they receive a payout from their cases.
Too often, Mr. Schwadron said, insurance companies and others that are being sued take advantage of plaintiffs and offer lowball settlement offers because they know the plaintiffs are desperate for cash, said Mighty co-founder and Chief Executive Joshua Schwadron. Cash advances, allow “people to stay patient and wait for a fair settlement added the CEO, who’s an attorney by training and formerly managing partner at another legal funding firm.
There are already firms that offer cash advances to plaintiffs in personal injury cases. But the marketplace model that Mighty is developing appears to be novel in the consumer legal funding industry and could be a good thing for plaintiffs, according to several academics who have studied the industry.
“It would be better for consumers if there were more people competing to be their litigation funder,” said Jennifer Reinganum, a professor of economics at Vanderbilt University who has studied legal financing. Dr. Reinganum first heard about Mighty from a reporter and isn’t connected to the company.
Mighty’s CEO said that the startup addresses criticisms the legal funding industry has faced, by safeguarding against frivolous lawsuits while keeping deals fair for both plaintiffs and funders.
The New York startup raised $5.25 million in Series A funds, the CEO said. IA Ventures and Tribeca Venture Partnersled the round, which had participation from Daher Ventures, FinTech Collective and individuals.
To learn more about how Mighty’s platform works, its results so far, and potential challenges for the business, please read the full story in VentureWire.
Write to Yuliya Chernova at firstname.lastname@example.org. Follow her on Twitter at @ychernova.