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 LevelEsq (formerly 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, LevelEsq (formerly 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.”