There is a scam being played out across the Midwest having to do with a quick confidence game involving lawyers, a potential client and law suit funding companies.

The scheme coming out of Kentucky purports to involve a “high dollar car accident injury” with the potential client promising to quickly hire the lawyer. The lawyer mails the initial sign up documents and shortly thereafter starts receiving telephone calls about the claim. Before a contingent fee contract is ever signed the lawyer finds himself talking to companies that either fund or purchase law suit settlements. The contract to hire never arrives and the purported injured client never materializes; the money disappears and the lender/purchaser learns a tough lesson.

The focus of the scam is law suit funding. The scam artist gets the money for a claim that doesn’t exist. Those companies that lent money to injured people or those purchasing the rights to the settlement proceeds get bilked out of any monies extended to the man. It’s an old scheme that focuses on the assumption that greed will make lenders and lawyers, do dumb things.

Young lawyers should learn that we aren’t bankers and don’t lend money to clients or extend credit except for advancing some litigation costs for clients without the means to do so themselves. Be aware, be sensible and never be greedy.

I contacted Mark Bello from Law Suit Financial to see if he’d heard of this con and asked him how lawyers can protect themselves and to recognize this type of scam.

The easiest advice to give you for this situation relates to the timing of the advance. Since lawsuit funding should be used as a revenue enhancement tool in mature cases, the obvious advice is that a brand new case is too early for revenue enhancement. Further, for purposes of fraud prevention, it is best for a lawsuit funding company to wait until an attorney has qualified the case, established insurance and policy limits, and, perhaps, has filed a lawsuit. That way, the funding company knows the attorney is "all in" and will be the guy handling the case. That is why my posts keep recommending that attorneys do business with and refer their clients to experienced funding companies. Anyone can say that they are this or that on the web.  But, you can't go wrong with experience and someone who has sat in your chair. Lawyers and funding companies should establish trust relationships with each other.  That way, you avoid doing business with someone who would fund in this type of situation. If a new client would fire you because you can't put cash in his pocket at the time you take his case, you probably didn't want him as a client anyway.  Regards, Mark (Lawsuit Financial Corp.)

Mark’s advice having to do with the maturity of a claim is sensible to say the least. Clients who come to you and immediately start demanding money are a bad sign and should be dismissed. I for one don’t’ like talking about case valuation before the case has reached a level of discovery making the value less of a professional guesstimate. At the beginning of the case it's impossible for anyone to predict wage loss, medical expenses or reduced earning capacity. It’s just not possible and any lawyer opining those numbers is fooling themselves and misleading their client. So pay attention to your litigation model and don’t get ahead of yourself or the case.