A YouTube video shows the makings of Joseph Rosales’s police brutality case. The 63-year-old man wails in agony from inside his overturned car as an officer attempts to extract him. What follows is a series of wrist locking, arm-twisting, body slamming, and pavement dragging on the part of the officer despite impassioned screams to stop from the disoriented man.
In a post-Eric Garner and Freddie Gray era of the Internet Age, a steady stream of high-profile encounters involving allegations of police overreach across America has erupted a media maelstrom transfixing the public conversation about race, politics, and police accountability.
But what makes Rosales’ experience different is that his encounter was put online, along with court documents and other relevant information, with the purpose of attracting potential investors in his case against the City of Chico and the officer.
Allow for a litigious society such as America’s and the growing trend in citizen journalism to expose civil injustices like police brutality, startup company Trial Funder Inc. has entered the realm with a panacea.
“We’re democratizing not only the investment process of litigation, but we’re bringing what’s happening in the justice system to everyone’s attention,” said CEO of Trial Funder Anoush Hakimi from the company’s offices in Century City.
Trial Funder is an accredited crowdfunding platform for investment litigation. Their mission: to have people invest, deter unlawful conduct, give someone justice, and make money all at the same time.
“We’re a Kickstarter for litigation. There have been attempts to raise donation-based capital on GoFundMe and various other crowdfunding sites. It just doesn’t work,” Hakimi said. “What we want to do is creating an incentive … because you get a piece of the recovery at the end of the day. It’s an investment. It’s not only a profitable investment, but its also conscientious.”
A plaintiff can raise non-recourse financing from investors to cover attorney fees and costs like expert witnesses, video depositions, and similar expenses. Trial Funder will underwrite a meritorious case and put the story on their mobile-friendly site with simple legal jargon, videos, and court documents that support the plaintiff.
Hakimi said that a typical return on investment on an investment opportunity through their site is above 60 percent, though they target an 84 percent return. But another aspect driving investors toward third-party investment litigation is the growing trend to invest with social good in mind.
As for laypeople, Trial Funder wants to include them in the litigation investment process, and Hakimi sees a real market for a society that values daytime shows like “The People’s Court” and “Judge Judy.”
“People are fascinated with the justice system, they’re just going about it in the wrong way,” he said. “They’re biting onto whatever is being fed to them, which is junk food. We want to serve an educational meal of law for them.”
Hopefully, he added, that translates into a more informed public on the current legal system and “moving the legislative needle” so that it’s friendlier to people who are injured.
TrialFunder.com has thousands of unique visitors a day. According to their own demographic data, the people visiting the site are well-educated, upper middle class. Many are attorneys, law students, activists, and investors from large firms. In the future, they want to see anyone over the age of 18 logging onto the site from, say, a bus stop, and donate money right there if a case moves them.
Crowdfunding and crowdsourcing industries have grown from $6.1 billion in 2013 to $16.2 billion in 2014, and are expected to reach $34.4 billion in 2015, according to research firm Massolution. The industry is growing at an accelerated rate, and North America still accounts for the largest market.
“Managing the growth is our next big challenge,” Hakimi said of his startup team of about 10 members. “This is a good problem to have, so we’re very happy to be in this situation.”
Last month, Trial Funder brought on a competitor as a new team member. Ron Sinai was fresh out of University of California, Berkeley when he and a couple friends started lending pre-settlement funding to injured plaintiffs.
“At Nova Legal Funding, the mission was to empower plaintiffs fighting big insurance companies,” Sinai said. “Trial Funder’s crowdfunding platform has the ability to scale that mission to a lot more people than previously imagined.”
Another product at Trial Funder is litigation finance, or providing capital right away for the high cost of legal services.
All cases, whether crowdfunded or funded through Trial Funder, are vetted by COO Peter Shariari. He heads the underwriting team and takes his background as a trial attorney to determine if a case is “good or bad.”
“This is the democratization of the economics of law. If you stop and think for a second that money is the root of all evil, here we’re using it to root out the good,” Shariari said.
Trust in each other at this stage in the game is important. Hakimi and Shariari were both finance attorneys in Century City and New York before starting Trial Funder; they go back 20 years, when they first met as undergrads and later as students at UCLA Law.
Though Hakimi said litigation finance has existed in America for 25 years, for the first time in history, crowdfunding investments have been made possible thanks to Title II of the 2012 JOBS Act, which lifted an 80-year ban on general solicitation and advertising of private startups and small businesses investment opportunities.
In October 2015, the SEC is set to promulgate the rules of Title III, or “crowdfunding” component, that will allow non-accredited individuals to invest in these private securities.
“If you look at online capital investing or even online capital raising, even if it’s donation or award based, you’ll see that the crowd is really what’s fueling the growth more so than accredited investing,” Hakimi said.
In the past eight months, they estimate they’ve looked at more than 4,000 cases but funded several dozen offline.
Though Rosales’ trial is still pending, Trial Funder raised 100 percent of his campaign goal, $20,000.
“A huge portion are investors that see this as a great opportunity to make money in what is the last frontier in finance,” Hakimi said.
For more information call 310.734.7838 or visit trialfunder.com.
