In the past, it was common for lawyers representing employees to front the money for filing fees, deposition costs and expert witnesses. If the employee won, so did the lawyer in the form of attorneys’ fees. Enter a new enterprise—companies that essentially invest in lawsuits by lending to lawyers money required to mount successful litigation. The investors make money by charging attorneys interest. But they will ring up much more if their customers win their cases.
The impact: This new financing system is helping lawyers bring more lawsuits without risking their personal wealth. And it may explain part of the recent explosion in group claims against employers.