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San Francisco Company Bankrolls
Davids Against Goliaths

By Kim Curtis  Associated Press
SAN FRANCISCO — When a David goes after a Goliath like Microsoft or General Motors and wins, the victor rarely gets the spoils — at least not right away.

Corporations usually appeal big-money damage awards, dooming the little guy to what could be years of costly legal battles unless he or she is willing to settle for much less.

"The legal system doesn't really work in this country unless both sides have money," said Alan Zimmerman, president of Law Finance Group Inc.

Now there's a way to even the odds.

Zimmerman's San Francisco-based company provides upfront cash to plaintiffs facing appeals after being awarded at least $250,000 at trial. It doesn't get involved in how the case is handled or how the money is spent — it just collects part of any final award or settlement. If the plaintiff loses the appeal, no money is owed.

Lawyer Jeff Shaw in Valparaiso, Ind., used Law Finance in 1997 when he represented a waitress whose 4-year-old son died in an apartment fire. Shaw proved there were no working smoke detectors in the home and won a $1.75 million award from the landlord's insurer, which immediately appealed.

Shaw and his client received $198,000 from Law Finance and promised to pay the company twice that much if they won the appeal. Eventually, the woman settled, paid off Law Finance and had enough money left over to buy a house.

"It really is for the benefit of the small guy, including the small lawyer's office that doesn't have the financial wherewithal to ride out these kinds of appeals," Shaw said. "It's just the way of the world. Big money is always going to be successful."

Herbert Smith of Philadelphia called Law Finance "a blessing."

He alleged age discrimination when he failed to receive an airport job for which he was qualified, instead receiving a lower-paying job with fewer responsibilities.

Smith, 65, received free legal services during the trial, but after a jury awarded him nearly $1 million in damages, Smith no longer qualified for aid even though he left the courtroom with just $2 in his pocket.

Naively, he assumed he would receive his award fairly quickly. But his employer appealed.

"I figured that within 30 days I'd have a million dollars in my pocket. If they send you to jail, you go right away," he reasoned.

Law Finance analyzed the case and Smith's chances of winning an appeal, and decided to give him $100,000. Smith said his eventual settlement was more than enough to repay Law Finance, pay his lawyer and fix up his house.

At least 15 percent of Law Finance's work involves personal injury cases. The rest run the gamut from discrimination to civil rights violations to insurance fraud.

It appears to be the only company in the country that does this type of work, and though it may seem like a gray area, the business is on solid ethical ground.

"What we're talking about right now is not whether the practice is proper, but whether the price is too high," said David Luban, a legal ethics expert at Georgetown University Law Center. "It doesn't bother me that this company is out there doing this. I'd feel better if there were a few others."

William Simon, who teaches professional standards at Stanford University Law, says Law Finance simply neutralizes a bias in the justice system.

"It's too bad that justice isn't free but I'm not sure there's any solution to that," he said.

Zimmerman and Michael Blum, the chief executive of Law Finance, have about 60 years of experience as attorneys between them. Zimmerman practiced in New York and California before founding his own firm and a financial services company. Blum was a civil trial attorney before founding a computer company.

Formerly known as Judgment Purchase, Law Finance has been doing business for about five years. While it won't reveal its annual income, Zimmerman said in September that the company's pending cases and those it was considering totaled in the tens of millions of dollars.

"If we weren't successful we wouldn't be in business," he said.

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