Litigation Finance, Sure. Litigation Insurance? UK Broker Seeks US Sales

By Roy Strom

The U.S. legal services market has within the past five years warmed up to the idea of litigation finance, a practice first adopted in Australia and then the U.K. A well-known British-based broker of litigation funding, TheJudge Group Holdings Ltd., will announce Wednesday it is launching in the U.S. with hopes to grow domestic awareness of another across-the-pond legal financial product: Litigation insurance for plaintiffs.

While insurance products have long existed in areas such as antitrust or intellectual property to cover the cost of defending a lawsuit, the plaintiff-side litigation insurance product that TheJudge brokers is less widespread. It can defray the cost of attorney fees and expenses for companies filing suits or law firms taking cases on contingency.

The insurance can cover costs and between 40 to 70 percent of attorney fees, with the largest contract TheJudge has brokered in the U.K. covering up to $40 million in fees and costs. As is the case with litigation funding deals, an insured plaintiff only pays a premium if its suit is a winner. The insurance is sometimes referred to in England as “after the event” insurance.

James Blick, a longtime director at TheJudge who will head the company’s U.S. operations based in New York, said insurance is in many instances a less- expensive alternative to traditional third-party litigation funding because the cost of the insurance policy is not tied to a percentage of a possible damages award. Litigation funders can sometimes earn up to 200 to 500 percent of their investment in a single case, Blick said.

“The insurer is taking a similar bet to the bet the litigation funder is taking,” Blick said. “If the insured case is unsuccessful, the insurer pays out a substantial sum of money and collects no premium. If the insured litigation is successful, the insurer will pay out zero and will be entitled to a premium.”

The cost of the premium is determined by an insurer’s underwriting process, and it is based on the cost of the underlying litigation and the policy limit. TheJudge, for its part, only receives a commission from the insurance company if the plaintiff’s case is successful.

Another difference between litigation insurance and funding is that insured plaintiffs pay the cost of their litigation as it progresses, with any potential payment from the insurer coming only after the case is over. Litigation funders typically provide money upfront to fund certain suits.

Blick said litigation insurance is a more popular product in the U.K. than litigation funding. That is primarily because it is economically viable for a broader range of cases. While litigation funders require cases with potentially huge damages awards in order to fund the entirety of a suit, litigation insurers can tailor policies for smaller cases. The insurance coverage is often as low as $200,000, Blick said.

For policies that size, TheJudge will be competing with an innovative litigation insurance provider that launched last year in the U.S.

Level Insurance, launched by a pair of Miami lawyers, provides what it calls cost protection for federal and some state litigation with policy limits of up to $250,000.

Somewhat different from TheJudge’s offering, Level Insurance’s product, win or lose, costs 7 percent of the amount of coverage a firm or plaintiff purchases. It can also be purchased through the company’s website with no underwriting process.\

“It’s a one-time premium payment and the policy follows the case through appeals and retrials,” said Larry Bassuk, president and co-founder of Level. “There’s no expiration date for the coverage.”

When asked why litigation insurance is not more prevalent in the U.S., considering it is more popular in the U.K., TheJudge’s Blick said it was because of the expertise built up by U.K. insurance companies in offering the product and the unconventional payment model compared to most insurance policies. In most types of insurance, premiums are paid regardless of whether a claim is filed. The U.K.’s “loser pays” system may also increase demand for the product.

“There are some basic features of this type of insurance which would make most insurance companies run for the hills,” Blick said. “If you were to turn up to any of the major, well-known American insurance carriers and say we want you to run the risk of losing a live piece of litigation and we may never pay you a premium, most insurance carriers just cannot wrap their head around that.”

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Litigation Cost Insurance Covers Losing Plaintiffs’ Expenses

Justin Leto

Plaintiffs lawyers know the rule: If they lose their lawsuits, they and their clients pay the expenses, while defendants often have insurance to defray legal costs. But what if there were a way to mitigate the financial risk plaintiffs assume in bringing a case to trial?

Level Insurance offers litigation cost protection insurance, which covers certain litigation expenses if a case results in a defense verdict. The insurance was developed by Justin Leto and Larry Bassuk, trial attorneys and law partners at Leto Bassuk in Miami.

“It’s a safety net for plaintiffs attorneys and plaintiffs themselves,” Leto says, noting that losing a case can destroy a plaintiffs lawyer’s business. Unlike the defense, who often can turn to a client’s insurance, no similar coverage had been available to plaintiffs.

FILLING A VOID

The concept of plaintiffs insurance started several years ago. Bassuk and Leto, although not partners at the time, were practicing trial lawyers. They searched for any instruments that would cover the financial investment required of attorneys who handle plaintiffs’ cases. “Nothing was available,” Bassuk says. “We saw the need for innovation in the legal industry.”

Bassuk and Leto became partners and set about developing the coverage now available through Level Insurance—a journey that took more than three years.

“It’s rare that a new insurance product comes to market,” Leto says. The two had to develop the product and technology—applications are completed online—and obtain licensure.

“This was something that didn’t exist and that we wanted to get behind,” says Gregg Miller, senior vice president with Socius Insurance Services Inc., a wholesale broker based in San Francisco that administers the policies. “We felt there was a real need for this.” The carrier is Aspen Specialty Insurance Co.

The insurance is available to attorneys taking cases on a contingency basis as well as to plaintiffs. Level Insurance provides coverage starting at $3,500 and up to $250,000. The insurance can be purchased up to 90 days after a case initially is filed; however, Level Insurance is not available to lawyers who’ve been censured.

Policies reimburse most expenses incurred in bringing a case to trial, including the cost of expert witnesses, travel, e-discovery and courtroom technology. “There’s no qualifier in our definition of costs,” Bassuk says, adding that a claims adjuster won’t reject covering the cost of a second expert witness, insisting the attorney should have only hired one.

Should an attorney decide to appeal, the coverage will follow the case through the appellate process, up to the coverage limits. Conversely, attorneys aren’t required to appeal. As a result, the policies offer attorneys freedom to litigate their cases as they deem most effective, without worrying that a loss might damage their practices, Leto says.

COMMON FEES

The premiums are 7 percent of the coverage amount, exclusive of taxes and fees. The fee is the same, regardless of the type of case.

Larry Bassuk

Larry Bassuk

Level Insurance launched last June in five states for state court actions, Bassuk says. As of early May, it was available in 21 states and for any federal district court case. “We accelerated our strategic growth in response to demand,” he says, adding that they hope to reach all 50 states.

While Level Insurance initially targeted attorneys working mainly on personal injury, medical malpractice and commercial litigation cases, it has received inquiries from those involved in a range of lawsuits, including product liability and breaches of contract.

It’s also sold policies to firms of all sizes, Bassuk says, noting that some use litigation cost protection as part of their risk management policy.

When plaintiffs themselves purchase coverage, the insurance won’t reimburse their legal fees. It will, however, cover money spent on deposition transcripts, their attorneys’ travel expenses and filing fees, among other costs.

The policies differ from products offered by litigation finance companies in that they’re not loans. In addition, unlike the terms of some litigation finance loans, the policies don’t restrict how policyholders invest in their cases, Bassuk says.

“We worked extremely hard,” Leto says, “and are proud of the end product.”

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This May Not be the News You Want But Bringing a Lawsuit Just Got Easier

By Peter Page

An insurance startup has a new policy that will cover the costs of bringing a case that you lose.

There is some bad news for people who fret our society is excessively litigious. A startup in the normally stuffy insurance industry has just made bringing a lawsuit less risky.

Level Insurance ( as in “level playing field’’), founded by trial attorneys and law partners Larry Bassuk and Justin Leto of Miami, Florida, now offers a Litigation Cost Protection’ policy that will pay some of the crushing costs of bringing a losing lawsuit. The policies reimburse out-of-pocket costs, other than attorney fees, up to $250,000 for essentials like expert witnesses, travel, e-discovery, court reporters, trial exhibits, courtroom technology, exhibits and on and on and on. Even if you have never heard the term “forensic accountant’’ you know you can’t hire one cheap.

“For a small business, they face tremendous costs,’’ Bassuk said. The cost protection policies cost a flat 7 percent of the policy maximum.

The United States is all-but-unique in the world for allowing “contingency fees,’’ an arrangement that allows a person or company bringing a lawsuit to pay their attorney a portion of the settlement — usually one-third — if they win the case and owe nothing if they lose. While often criticized for encouraging litigation, contingency fees have allowed people of modest means to bring lawsuits against deep-pocketed corporations, perhaps most famously the asbestos and tobacco industries.

Bassuk said the cost protection policies have found a market with plaintiff attorneys who want to minimize the risk of losing out on expenses (as well as their own fees) if they bring a contingency case and lose.

“The ultimate underdog scenario is an individual who doesn’t have the capital to bring suit against a large corporation, they need a lawyer to bring the case on a contingency basis,’’ Bassuk said. “Day to day, lawyers doing contingency work who get an expensive case to prosecute want to spread the downside risk if the case lose.”

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Miami lawyers Roll out Litigation Insurance in New Jersey

By Andrew Sheldon

Justin Leto and Larry Bassuk were two trial attorneys in Miami when, from experience, they saw a need for a service: litigation insurance.

So, the law partners created the first and only insurance solution for plaintiffs’ attorneys and litigants covering litigation costs in the event of a trial loss in the nation.

It’s now available in New Jersey, through their company Level Insurance.

“What we’re doing is expanding it across the country based on demand and New Jersey happened to have a significant demand, so we immediately expanded to New Jersey and now we’re in 10 states total,” Leto said.

The service was meant, specifically, to address the rising costs for litigation.

“Businesses that have to pay for litigation are experiencing a lot of pain because of rising litigation costs; in particular, the cost of e-discovery,” Bassuk said. “I know, as a commercial litigator, the costs of dealing with e-discovery are astronomical.

“It’s a seven-figure cost.”

Along with e-discovery, Litigation Cost Protection is available for most tort claims and contract actions, and provides reimbursement for out-of-pocket expenses paid to further the litigation, which includes expert witness fees, travel, court reporters, trial exhibits and courtroom technology and exhibits.

Coverage is currently available for eligible cases filed in all 50 state’s courts and in United States District Court cases in all 50 states.

Coverage limits range from $3,500 to $250,000, while policy premium (exclusive of taxes and fees) is always 7 percent of the total coverage amount regardless of the type of case.

“I can tell you New Jersey lawyers seem very excited about it,” Leto said. “And, as far as Jersey businesses are concerned, if they’re involved in high-stakes litigation and they have to pay lawyers both the fees and the costs, it makes a lot of sense for them to hedge a portion of that bet so their business can feel more comfortable about spending that kind of money.”

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Lawyers Launch Insurance Policy for Contingency Cases

By Celia Ampel

When Justin Leto was a young plaintiffs attorney, another lawyer in his building asked how he dealt with the financial risk of pursuing litigation. Could his firm somehow insure legal costs in case the jury returned a defense verdict?

There was no such protection. “If we lose the case, there’s no way for us to get any of that back,” Leto told Larry Bassuk, now his law partner at Leto Bassuk in Miami.

But in that conversation was the seed of an idea, which this summer blossomed into a new kind of company. Level Insurance offers up to $100,000 in coverage for plaintiffs attorneys’ costs in the event of a defense verdict. The policies, which cover individual cases rather than lawyers or firms, are available for federal court cases in all 50 states and state court cases in California, Florida, Illinois, New Jersey, New York and Texas. Level Insurance plans to roll out across the country in the next few weeks.

The policies cover a wide swath of litigation areas, including auto negligence, medical malpractice, contract disputes, product liability and premises liability. Level Insurance will not insure a lawyer who has been disciplined by the state bar or cover litigation against the government. But other than that, the company does not analyze the merits of a case.

That could be risky business, said Aaron Davis, who handles both plaintiffs and defense work for Davis Goldman in Miami. He noted that other litigation finance companies usually rigorously vet cases.

“It’s a different model, but the premise is the same: You still wouldn’t insure something
against a loss if you don’t understand the risk of that same loss,” he said.

But because Level Insurance only pays out a policy if the case reaches trial and a jury awards no money to the plaintiff, the company isn’t on the hook for lawsuits that are dismissed in the early stages of litigation.

CASES OF ALL SIZES

New York plaintiffs attorney Andy Buzin has already used Level. As a solo practitioner with many clients who can’t afford to pay an hourly billing rate, “there’s never any guarantee of an outcome,” he said. “This is something that you can use to lessen your risk in being the little guy who takes on insurance companies and big corporations on contingency.”

Defense attorney Mark Rose of Roig Lawyers in Deerfield Beach, Florida, said he doesn’t expect to see an uptick in frivolous cases filed by the plaintiffs bar, but “will it encourage, perhaps, riskier suits or more complex cases? I think so,” he said. “I think that’s a reasonable expectation.”

“You might see less well-funded firms, maybe smaller firms, that are more inclined to take on a more complex or riskier case,” he said.

Level’s founders say the company ultimately aims to provide coverage to larger law
practices, as well as small firms and solos.

Plaintiffs attorney Philip Freidin of Freidin Brown in Miami is a litigator who brings multimillion-dollar personal injury, medical malpractice and tobacco cases to trial.

“We take the best cases that come in, and they pretty much all have some degree—from moderate to high level—of risk,” he said, adding this is the first way he’s been able to mitigate that risk. He’s hopeful the company will increase its policy limits as it grows.

Cofounder Leto noted that even big firms feel the crunch at a time when it can cost $5,000 just to bring one expert witness to trial.

“As the business of law continues to evolve and change, it’s become more and more costly,” he said. “Everything that we did 10 or 15 years ago is exponentially more expensive today.”

Gregg Miller, chief sales officer for Socius Insurance Services Inc., which manages Level Insurance, said the brokerage is approached all the time about new insurance concepts. “This particular product stood out to us as an innovative product that didn’t already exist in the marketplace,” Miller said.

HOW IT WORKS

To purchase insurance through Level Insurance, lawyers visit the company’s website, Level Insurance.com, and submit a copy of a complaint, which must have been filed in the past 90 days.

They then choose policy limits between $3,500 and $100,000 to cover costs including expert witness fees, travel, e-discovery, court reporters, trial exhibits and courtroom technology. For every case, the premium is 7 percent of the policy limits.

The insurance covers costs starting at the time the lawyer was retained in the case, meaning some covered costs can pre-date the purchase of the policy, and coverage extends through the appeals process.

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Two Florida Litigators Found First U.S. Litigation Cost Protection Insurance Company

By Karen Kidd

Two Miami-based litigators once asked themselves why there was no insurance coverage for attorneys to cover the costs of pursuing a case.

It was Larry Bassuk who first gave voice to the question, said his colleague Justin Leto.

“We stopped asking why we couldn’t find this coverage anywhere,” Leto said during a Florida Record telephone interview. “Then we started offering it ourselves.”

Today, Bassuk is president and Leto is CEO, both are co-founders of Level Insurance, which offers litigation cost protection insurance coverage for the litigation costs spent by plaintiff attorneys or plaintiffs in the event a loss at trial, such as a defense verdict. If a case is lost, all money spent on litigation-related costs are paid to the insured, up to the policy limits selected at the time that coverage is purchased, according to the company’s website.

“This is a valuable tool,” Leto said. “This means that people can stop worrying about the costs and move on to the merits of the case.”

Similar to after-the-event coverage products long available in Canada and Europe, Level Insurance is the first and, presently, the only insurance coverage available in the far more litigious U.S. that covers litigation costs. Level Insurance’s stated goal is to offer protection and encouragement to lawyers, putting them in a position to take on more and, perhaps, riskier cases.

“These kind of losses can be devastating to a firm” Leto said. Worry about possible losses can cause a firm to turn down business, Leto said.

“They might be interested in pursuing a case, the merits of a case might be very good,” Leto said. “But they might turn it down because of the significant amount of money they might lose.”

Having litigation cost protection insurance coverage reduces that concern, Leto and Bassuk said.

Initially offered only in Florida, Level Insurance currently also is offering policies in California, Texas, Illinois and New York and soon will be offered in New Jersey.

“Our hope and belief is that this ultimately will be in all 50 states,” Bussak said.

San Francisco-based broker Socius Insurance Services Inc. manages the product while the financial risk is backed by Bermuda-based Aspen Insurance Holdings LTD.

“Litigation cost protection is an affordable solution for plaintiffs’ attorneys and litigants which insures against the loss of cost disbursements in the event of a loss at trial,” Level Insurance’s website says. “It covers costs spent in furtherance of litigation including expert fees, deposition transcripts, travel (hotels, airfare and ancillary travel expenses), filing fees, trial exhibits, mediator expenses, copies, e-discovery, and all other costs spent directly on the case. Litigation cost protection does not cover attorney’s fees.”

“You have the freedom to prepare and litigate your case without anyone second-guessing the necessity of your expenditures. When a claim is made, you will receive reimbursement for expenses covered under the policy. It’s that simple.”

Level Insurance’s litigation cost protection coverage covers a wide variety of trial expenses, including expert witnesses and various litigation-presentation costs. Policies are written for a cost of 7 percent of the amount insured, with a $100,000 coverage cap.

The coverage does not cover the time spent preparing for a case or if the case is lost through
a motion to dismiss.

The pair would not say how many attorneys have signed up for their product, but Bussak and Leto said the response has been very enthusiastic.

“Our projections have been exceeded so far,” Bussak said. “Substantially exceeded.”

To view original article, click here.

Now Lawyers Can Get Reimbursed Even If They Lose a Case

By Erik Larson

When David Brill lost a trial for a client who fell off his neighbor’s ladder, it was a rare failure for his three-member Florida law firm. It also cost him $30,000 in expenses since he’d taken the case on contingency, meaning the client paid nothing and he took all the risk.

A decade later, the loss was still fresh on Brill’s mind when he learned about Level Insurance, which offered something he’d never heard of: full reimbursement for out-of-pocket expenses if lawyers take a case on contingency and lose at trial.

Brill signed up in July for a slip-and-fall case, and said he plans to buy coverage for every case his firm handles — about 50 at any given time. He called it “a game changer” for plaintiffs’ attorneys like himself.

While similar products known as “after the event” insurance exist in Canada and the U.K., Level Insurance — founded by Florida litigators Justin Leto and Larry Bassuk — says it’s the first to offer such coverage in the U.S., a much more litigious market. Their stated goal is to protect themselves and to encourage lawyers to take on even riskier cases.

“We recognized that this coverage would benefit our own practice and wondered why it did not exist,” said Bassuk, 34. “So we committed to developing it ourselves.”

More Trials?

Litigation Cost Protection covers trial expenses including expert witnesses and litigation-presentation costs. The policy costs 7 percent of the amount insured, with a $100,000 coverage cap.

The insurer doesn’t assess the merits of a case, just whether the attorney is in good standing with the state bar. Insurance is available in state courts in Florida, California, New York, New Jersey, Illinois and Texas, as well as in federal courts in all 50 states, Leto said.

Expanded Coverage

Robert Hilliard, one of the top plaintiffs’ attorneys in the U.S. who has worked on product liability cases against General Motors Co., hadn’t heard of Level Insurance. He immediately saw its value, saying it’ll “allow those who might consider staying on the sidelines to file and fight.”

In the U.K. and Canada, where unsuccessful plaintiffs must often pay defense costs as a way to discourage frivolous cases, insurance that pays some costs “has been very, very successful,” said Simon Gibson, who was hired this month by insurance broker Aon Plc to head a new legal expenses group in Canada.

While that coverage usually applies to bodily injury, insurers may begin to cover expensive medical malpractice and commercial litigation, with policies extending to $500,000 or even $1 million. Drugmakers and auto manufacturers, often the targets of product-liability lawsuits, have long had policies for legal liabilities, reducing their risk of going to trial.

The client makes the final choice about trial, Bassuk and Leto said. And while the insurance protects out-of-pocket expenses, it doesn’t cover the time spent preparing for a case or if a lawyer loses before trial, such as on a motion to dismiss. They wouldn’t say how many clients they’ve signed up.

Socius Insurance Services Inc., a San Francisco-based broker, manages the product. The financial risk is backed by Bermuda-based Aspen Insurance Holdings Ltd., an underwriter in the U.K. and U.S. Aspen spokeswoman Erin Smith declined to comment.

Litigation Cost Protection “stood out as a product in an industry that had a specific need for something that did not exist,” said Gregg Miller, Socius’s chief sales officer.

Fla. Attys Launch Litigation Cost Insurance Co.

By Carolina Bolado

A new insurance product created by two Florida attorneys could help lawyers working on a contingency fee basis manage risk by allowing them to recoup costs if they lose in court.

Justin Leto and Larry Bassuk, partners at Leto Bassuk in Miami, last month launched Level Insurance, a litigation cost protection program that allows plaintiffs’ attorneys and their clients to buy insurance policies on a case-by-case basis that give them up to $100,000 in protection if they lose.

The two attorneys, who have been working on the project for four years, said this is the first product of its kind.

“What we have here is something that probably should’ve existed for a long time,” Leto said.

“Things are changing, and people are recognizing that cases are becoming very expensive, with e-discovery and defense teams having endless sums of money.”

The project started before the two had teamed up at their own firm, when Leto was a plaintiffs’ lawyer and Bassuk was a commercial litigator. Bassuk asked if Leto could insure against a loss, and when they searched for a way to do that they found that no such thing existed, so they set about creating it themselves.

Attorneys can buy policies within 90 days of filing a complaint that provide as little as $3,500 to as much as $100,000 in coverage, though the pair said they hope to be able to provide more in the future. The price is flat — 7 percent of the amount of coverage chosen — and the program is managed by Socius Insurance Services Inc. and underwritten by Aspen Specialty Insurance Co.

If an attorney takes a case to trial and loses, he or she can cash in on the policy and recoup the costs spent trying the case.

The policies are available in every federal jurisdiction and in state courts in California, Florida, Illinois, New York and Texas, with plans for expansion to more jurisdictions. Bassuk and Leto said so far the response has been great, both at conferences where they’ve shown off the company and online where Bassuk said they are “voting with their mouses” and buying policies.

“It allows you to pursue a case and eliminate a significant risk at the back end once a case has been fully litigated,” said Andrew Buzin of Buzin Law PC in New York. “It allows you to go into a case with almost a different perspective because you don’t have that exposure at the end of the day. We take cases we believe in and cases that have value and merit, but the problem is that there’s an inherent risk anytime a case goes to trial.”

Buzin, who is on an advisory board for Level Insurance, said for plaintiffs’ attorneys, whose income is uncertain from year to year, this can create a more secure business model for small firms. He said he just filed his first eligible case and plans to buy an insurance policy for it soon.

“There’s an attorney up in New York who calls our practice ‘jumping from lily pad to lily pad,’” he said. “We only get paid when we win. This puts in place a protection where you can feel more confident going into trial.”

Can You Still Get Paid Even After Losing a Case?

By Jonathan R. Tung, Esq.

We’ve all heard of car insurance, but what about case insurance? Well, that’s the basic service being offered by two personal injury lawyers out in Florida who launched their company Level Insurance last month.

It’s too soon to tell if this is going to be a golden goose for them, but it does raise some interesting strategy (and ethics) questions. But with the shifting paradigms of litigation financing, we’re hardly rattled anymore.

The Contingency Chasm

It basically goes something like this. A personal injury case (particularly a complex one) can take years and many dollars out of the plaintiff’s attorney. In most PI cases, the plaintiff’s attorney signs on with the injured party for a contingency fee. The percentage can range anywhere from very low to as high as 40 percent.

The problem, as we all know, is that there is no guarantee of winning. This translates into lost effort, time and investment. Pretty soon, you could find yourself in a chasm of debt for a client’s case that didn’t go the way you originally intended.

Enter a Safety net

The two lawyers in question, Justin Leto and Larry Bassuck launched their case-insurance company last month with the hopes of getting in on the ground floor of what could be a big niche market. The idea is that, for a flat fee of 7 percent, Level Insurance will cover your lost fees and other costs up to $100,000. The catch is that you must lose your case.

That’s right. Your case has to go into a steaming pile of a wreck and you must lose. There is no settlement. There is no dismiss. The necessary condition is that you lose in court.

No Conflicts, of Course!

You’ve already thought up of the potential kink in the business plan, we’re guessing. Why not just throw your case and forget the ethics, as can happen at as a strategy at the Olympics?

Well, there is at least one safeguard against doing that. First, you must purchase Level Insurance’s plan 90 days before filing court papers. This at least is one filter. We’re also guessing that the pair also invests heavily in investigators who make sure that policy-holders aren’t up to any fraud shenanigans.

The founders don’t seem to be particularly worried, apparently. “Your end game with a contingency-fee case after 2-3 years of hard-fought litigation is to earn that fee,” Bassuk says. “If I give you back all your costs with no interest I don’t see that as an incentive to swing for the fences.”

What if You Could Be Paid to Lose a Case?

By Lisa Needham

Garden variety litigation financing has been around quite a while in the personal injury arena. Parties (typically plaintiffs) are given up-front cash in exchange for a portion of their payout from a case when they win. Of late, it has expanded to other lines of practice and warrants keeping an eye on it if you practice in family law or business litigation.

Those types of arrangements offer your client some security, but what about you? Is there any recourse you have to guarantee that you get paid if you have a case that goes sideways? Apparently, yes.

Attorneys Justin Leto and Larry Bassuk launched Level Insurance last month and it’s too early to say whether the product is a success but they hope to carve out a niche in competition with existing lenders who finance plaintiff lawyers with high-interest loans, often secured by personal property. […]

Leto and Bassuk, Miami personal-injury lawyers, decided insurance could provide a better mechanism for keeping the litigation rolling. Level is offering insurance policies for up to $100,000 at a flat fee of 7%. Lawyers must purchase the policies within 90 days of serving papers on the defendant and they only collect if they lose.

The appeal of this is easy to see. If you’re working on contingency, you can run up an awful lot of fees and costs and end up with nothing. It raises some ethical quandaries, however. What about the idea that an attorney would consider just tanking a case to get the $100K and be done with something thorny or long-running?

Well, first there’s the hope that people just wouldn’t do that because it is unethical as can be. The real line of defense, most likely, is that you have to lose. Not settle, not remove yourself from the case. Lose.

For most attorneys, the idea of losing at trial (or via a motion to dismiss or summary judgment) is pretty unappealing to one’s ego and reputation. That said, Level Insurance isn’t vetting the cases they insure, which means that someone unscrupulous might take a complete loser of a case just for the payout.

No matter what, it’s a brave new world for litigation financing when attorneys can insure themselves against their own losses. Expect a range of ethics issues we haven’t even thought of yet to spring from this.