Claims administration, third-party funding and access to justice
By Jennifer Pritchett, Associate Editor
Third-party funding can not only be used to finance unresolved litigation, it can be applied in a claims-administration process to ensure plaintiffs get timely payment for settled lawsuits, says John Rossos, co-founder of BridgePoint Financial Services Inc.
“The claims-administration process could result in better outcomes for plaintiffs if financing was available to expedite the recovery of funds that they’re entitled to,” he tells AdvocateDaily.com.
A financing program can easily be implemented as part of the claims adjudication protocol that has been established to provide compensation to members in a class-action lawsuit, explains Rossos, a Chartered Financial Analyst and a member of the Ontario Bar.
“It would work well in situations where a class member’s damages are defined by a “grid” compensation scheme that has been agreed by the parties," he says. "The individual class members will have to adduce some evidence to support their claim and funding can be advanced during the interim period to assist class members in dire financial need."
Depending on the complexity of the claims-administration process, it can take two years or longer for people to receive their compensation, Rossos says.
“In the meantime, a prime example being the Hepatitis C class action, an individual's health may deteriorate significantly and they need access to money to assist them with ongoing medical costs and other bills,” he says. “Waiting through the administration process could be harmful to claimants.”
BridgePoint offers a funding solution to provide interim financial relief to those claimants, pending the finalization of their suit.
Class actions, which are designed to promote access to justice, are lengthy, capital-intensive exercises where law firms are subject to a high degree of risk and uncertainty, Rossos says.
“BridgePoint’s services are designed to allow law firms and their clients to have access to financing and insurance to enable them to obtain fair compensation for their claims,” he says. "Without our services, people would be forced to capitulate and accept a deep discount on their claim.
"Offering a post-litigation funding solution is a logical extension of our funding program allowing us to provide individuals or businesses with interim financial assistance at the conclusion of a class action pending the resolution of their claim.”
SpectraLegal, BridgePoint’s European affiliate, has leveraged its expertise in Canada to design a dispute-resolution mechanism to expedite a significant consumer claim involving millions of U.K. residents that will allow the parties to bypass litigation and provide a quick, efficient resolution for their claims.
With offices in Dublin, Ireland and London, England, SpectraLegal has adopted the claims-administration process model to offer what Rossos describes as a “tidy industry wide solution” to what is considered that country’s largest “mass contract” case.
“We’ve come up with a novel way to use claims administration and finance to eliminate the requirement for litigation by employing an alternate-dispute-resolution process that results in better outcomes for everyone,” he says.
“Rather than have the defendants litigate every claim, we will provide them with the opportunity to resolve claims quickly, while saving an enormous amount of money on litigation.
"The client will receive full and fair compensation on a timely basis, where the defendant pays 100 per cent of their legal costs. In addition to the significant cost savings, the defendants will also obtain a full and final release for all future related or collateral claims providing them with legal certainty that no other amounts will be payable at some future date."
Rossos says it is a win-win situation.
"Considering the size of the program, SpectraLegal will also provide an industry-wide financing solution for law firms to enable them to manage the volume of legal claims they will be submitting for their clients," he says.
Rossos says the same model could be applied to other complex cases with significant damages and a large population of claimants, where there are evidentiary and administrative obstacles that an individual must overcome in order to have their issues assessed.
"This is about creating a system that’s more efficient for all parties while ensuring timely access to justice," he says.
"The litigation process isn’t over when a judgment has been issued or a settlement agreement has been executed. It only ends when the cheque hits the bank account of the claimant.”