In today’s litigious society, it is no surprise that investors are taking advantage of the opportunity to profit off of lawsuits. Litigation funding by private investors is on the rise and becoming mainstream through startups like LexShares and Trial Funder Inc. LexShare allows the average investor to fund commercial lawsuits and offers as much as a 90% ROI. Traditional litigation finance companies backed by hedge funds generally sink millions of dollars into large cases while these newer startups focus on smaller cases with payouts too little for these larger funds to get involved in. Funding smaller cases allows the average investor with less deep pockets to get partake in and profit from lawsuit investing. Investor funded and created claims are on the rise in a range of cases from real estate to medical malpractice to environmental. The availability of funds encourages plaintiffs to pursue lawsuits which a lack of funds would have previously prevented them from pursuing. Litigation funding companies pay the plaintiff directly; lending rates are often high and in the case of a win, the funder can gain 10-25% of any recovery.

Insurance companies in particular should be weary of these claims. eClaims Management (an eServices Company) has really proven itself as an industry leader with the spotlighting of Investor Created Claims. This trend has been plaguing the industry and gone unidentified for years. Faced with growing financed litigation schemes, eClaims Management developed a dedicated team approach to these claims and try to find them early on by applying SIU and MIST approaches. This sends a message to the investment companies that they may not want to consider investing in a claim handled by eClaims.

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