The Evolution of Litigation Funding: Initial Litigation Offering (ILO)
Litigation is a necessary part of keeping a society balanced and operating without descending into absolute chaos. It’s a mature, in-depth, attempt to make amends when situations go wrong and conflicts erupt. However, despite being absolutely crucial for any sort of society to function, it certainly isn’t cheap. This is especially true in the modern day when there are several instances that skyrocketing the price of litigation can be used as a way to “price out” potential lawsuits. We’ll talk more about that, later on.
Over the years, as this has become much more of an issue, different funding tactics have been developed to keep the litigation process accessible and capable of being leveraged by whoever might need it; as it should be.
One of the newest and most novel ways litigation funding has evolved is the advent of ILO or initial litigation offering.
This new method of funding litigation has become quite popular, and it’s probably one of the best ways to access the legal system in situations where you’d typically be unable to due to funding.
We’re going to go over what initial litigation funding is, how it works when it’s useful, and the impact that it is having on the industry as a whole.
What is Initial Litigation Offering?
Initial litigation offering is a new concept that is very similar to the commercial concept of crowdfunding.
With crowdfunding, a small company or inventor with a great idea shows that idea, and proof that it can be brought to life, by the general public. If the general public likes it, people are able to donate money towards the fulfillment of the project. If the funding goal is met, and the product comes to market, the people who funded the project have essentially bought it in advance. If it fails to get enough funding, its donations are typically returned.
Another time you usually see this sort of thing in the normal world is when someone wants to start a business, but can’t get enough money from a bank loan or find an investor. Instead, they might ask family members to invest in the business, and in return, they’ll share the profits with each “investor” until they’ve paid them back with a bit of interest as an incentive.
Well, the legal version of this is almost practically the same.
Let’s say that something has happened, and a normal individual without a lot of funding needs to start a lawsuit against a larger entity. They can’t afford to pay the fees for lawyers and various other court costs upfront. So, they ask random people to help fund it.
This is where ILO starts to differ a bit, though.
With the other types of crowdfunding, money is returned if the goal isn’t reached, and if it is, the product promised is guaranteed to come. You can’t do that with a legal lawsuit, because the outcome isn’t guaranteed after the funding is produced.
As such, “investors” in this situation are promised a cut of the winnings. If the case falls apart, that’s just how it goes.
Complications That Arise with ILO:
ILO sounds like the perfect solution to litigation funding problems at first. You ask strangers to pay for it, and if you win, you give up some of the winnings to repay them. What’s not to love about that? However, it does create some complications.
Primarily, there’s the issue of convincing people to invest in the lawsuit.
There is no guarantee that you will actually win. So, investors are taking a much bigger risk than if they were to go on Kickstarter and essentially pre-order an item before it hits production; at least in that situation, they can get their money back if the product is never produced. You cannot do that with a lawsuit. You can only hope that the person in the courtroom is as capable as the lawyers at the Litigation Legal Insight.
You might have the best argument possible and stand a great chance of winning, but there’s always the chance that the court simply won’t see it the same way you do.
Because of this, you have to be able to present a sound argument that convinces potential donators to commit. While you cannot possibly guarantee anything, you can present the facts, and you can convince them that your chances of winning are far better than your chances of losing.
Then, you have to overcome the obstacle of convincing potential donors that it’s even their problem.
Depending on the situation, a donor might not have a genuine reason to care. If you’re trying to sue Walmart because you fell on the property, why would a random stranger commit their hard-earned money to it? They’re unaffected, and the potential financial reward probably isn’t worth their time.
However, if you can convince them that the situation is much larger than just your own personal problems and that they stand a good chance of making a sizable return on their investment, you can give them a reason to make it their problem.
These are the two biggest obstacles that will stand in the way of anyone trying to raise money to leverage a lawsuit, but they can be overcome if you have the right arguments and the ability to market it as a good decision.
When is ILO Used?
There are a lot of ways to fund a lawsuit. In small claims court, some people simply show up, state their case, and pay out of pocket for court fees. Sometimes, even with bigger cases, the parties involved have plenty of capital and resources to fund the case on their own.
ILO isn’t used for those situations. It’s specifically used to get the funding necessary for a smaller entity to challenge larger, more financially capable, opponents.
The most common example of ILO being a good idea is when an individual or group of individuals is trying to sue a large company or another powerful entity.
Why is ILO Used to Fight Large Corporations and Entities?
It’s an unfortunate fact because the legal system is supposed to be the purest way for a society to manage itself and keep things operating fairly, but the more money you have, the more power you have.
A large corporation can use its financial capabilities to completely block smaller groups from even attempting to challenge it. This can be done in a few ways.
First, an average individual might not have the funds just to secure a lawyer; let alone a lawyer that is experienced enough to take on a big company with its own highly paid legal teams and come out on top. Because the chance of winning is so low, many individuals simply let the issue go. That’s not how litigation is supposed to work.
Then, there’s the more underhanded and malicious tactic many large companies use; they can simply draw out the case and exhaust the funds of the less affluent party. Let’s say you’re suing a major retailer with a global presence, and you have somehow scrounged together $100,000 to fuel your legal effort. To you, that $100,000 is probably a substantial amount of money that SHOULD make a big difference. To the company you’re facing, it’s pocket change. They can attempt to just stall the case, run up your legal costs, and exhaust you until you drop it. It wouldn’t even hurt their bottom line to drag a case out for years if it’s a big enough company.
ILO helps to put a stop to that.
As we’ve stated, the legal system is not exclusive to the rich and powerful; it’s a tool for all Americans to leverage and find justice through. ILO makes that possible.
In essence, initial litigation offering is the equivalent of small, “weak”, and plentiful opposition coming together to take down the larger, more powerful, bully. Each individual funding the case might not be able to come remotely close to beating a major corporation, but together, they can make a massive impact.
How is ILO Changing the Legal Landscape?
Initial legal offerings are making a huge positive impact on the world of litigation. While it’s not a perfect system, and it does require a bit of convincing to get donors onboard, the benefits and the possibilities it has opened up are a major step in the right direction for litigation and the overall state of society in general.
Here are some of the biggest benefits ILO offers in the current legal landscape.
1: Bridging the Gap
Unfortunately, there is a major gap between big companies with powerful legal teams and the average citizen or small business owner. That has been noticeable for decades. However, ILO is helping to bridge that gap.
As more smaller entities realize they can work together to scrape together the funding needed to take the fight to big corporations effectively, the legal landscape balances out even more. It’s not meant to be a manipulated tool to squash those who might step up to big corporations; it’s supposed to be a system for proper discourse and justice. ILO is helping to make that a reality, again.
2: Inspiring the Little Guy
Big companies have had a reputation for getting away with horrible decisions for decades. It has often been considered impossible to stand up, and the best most average people could hope to do was get an out-of-court settlement that didn’t even resemble justice or making amends.
Now, as more people are able to challenge these mega-corporations and powerful individuals, trust in the legal system and its ability to properly serve justice to all is returning. It’s now a possibility for a small business professional who was run out of town by predatory business practices to stand up and hold big companies accountable, and people are starting to realize that.
In a way, this is about much more than just funding lawsuits. It’s about giving the majority the power to fight back against otherwise untouchable entities with far more power than them. It’s essentially giving a voice back to those who wouldn’t stand a chance otherwise.
3: Putting Companies on Notice
In the past, it is, unfortunately, true that many companies without sound ethical compasses felt they could get away with anything. That’s why you had many situations where companies damage communities with toxic waste, mistreat employees, use their money to influence legal matters, and sometimes, even create neglectful and harmful situations for customers without ever taking those issues seriously.
The companies really didn’t have to care, because they could afford the best lawyers, persuade challengers with settlements, hush the problems under the rug, and get away with it with ease.
Now, that’s not the case.
This has certainly put companies on notice and made them more aware of their actions. It’s not a matter of having a major class lawsuit with thousands of participants and irrefutable evidence being the only thing that scares them, anymore. If a person really has a case and some support from their peers, they can directly challenge that company without waiting for an entire law firm to start a class-action lawsuit.
This has a ripple effect, as well. Since companies are on notice and understand that they can be challenged now, they have a reason to ensure their policies are in line with the law, socially and ethically acceptable, and not detrimental to the environment or the communities in which they operate.
How to Start ILO
ILO has three main ways that it can be secured.
First, you can go online. There are sites and platforms dedicated to ILO just like Kickstarter and other platforms are dedicated to product development. This is an easy route, but keep in mind how difficult it can be to convince people in such a manner.
Then, you can embrace the newest form of ILO: Crypto. Investors interested in funding ILO campaigns have begun using crypto. They can purchase an ILO token, and donate it to the cause they’re looking to fund, and everything is kept secure on the blockchain. This is incredibly useful for litigation that is going to be extremely expensive.
Finally, you can contact Litigation Legal Insight Group. We can help walk you through the entire litigation phase from securing funding to building a case and winning.