Crowdfunding site seeks profits — and social justice — in financing police abuse lawsuits

People have turned to crowdfunding to finance everything from independent movies to bone marrow transplants to high school field trips. Now, a Los Angeles man is taking that model to police abuse lawsuits - but rather than donations, he's seeking investors.

Anoush Hakimi wants to turn a profit while seeking social justice.

The effort is designed to address a perennial problem in police abuse litigation: most victims are poor and their attorneys only get paid when there’s a settlement or a jury finds in their favor.

In the meantime, attorneys spend their own money to hire expert witnesses, conduct discovery and prepare the case.

“So naturally, plaintiff attorneys are reluctant to take on cases unless they are a slam dunk,” said Hakimi, 37, a Century City finance lawyer. “This leaves a lot of people out in the cold.”

Too often, he argued, victims are forced to settle a case on the cheap because their lawyers can’t afford to fight. The Iranian immigrant, who graduated from UCLA Law School, said he co-founded TrialFunder.com to raise investor money to bolster good cases.

Hakimi said investor money will “level the legal playing field” against deep-pocketed cities, counties and corporations.

“There are so many cases where terrible things have happen to people who only have a black eye or who only spent a couple of hours in custody,” said Pasadena Attorney Ron Kaye. “But nobody’s willing to take a case because they just can’t afford it.”

Kaye recently won a judgment against the Los Angeles Sheriff’s Department that included $5.4 million in legal fees in a jail beating case where the victims suffered serious injuries. 

Trial Funder launched last month with a case that included videotaped footage of an officer in Chico, California twisting the arm of a 63-year-old man to try to force him to get out of an overturned car.

Chico police said the officer was trying to save Joseph Rosales’ life because a building roof was about to collapse on the car. Rosales says he suffered a back injury.

“Next thing I know, he kind of picks me up and slams me on the ground,” said Rosales, a retired telephone systems specialist. “My head hit the back wall. I still suffer to this day.”

Trial Funder has raised $20,000 from investors to help Rosales fight the case.

“Trial Funder dot-com in its simplest terms is a catalyst for change and social justice,”Hakimi said.

Trial Funder taps into an exploding litigation finance business that caters to only to accredited sophisticated investors who understand the risk. Without a settlement or favorable judgment, they lose everything. It also raises money for personal injury cases.

The U.S. Chamber of Commerce has raised alarms about litigation funding . It warns of frivolous lawsuits and payouts to satisfy “cash-hungry funders."

Such investments can also be lucrative. One of the biggest litigation finance players right now, Burford Capital , saw its revenues jump 35 percent last year to $82 million, according to Bloomberg News.

In Trial Funder's model, investors take up to 15 percent of the settlement in police abuse cases and up to 25 percent in personal injury cases, on top of their initial investment. Hakimi also takes a fee.

“Ultimately what will make this a sustainable solution is if the returns are available to investors,” Hakimi said. “It can’t just be something that’s viewed as a charitable act.”

In exchange, plaintiffs’ lawyers agree to take a smaller percentage, Hakimi said, because they are taking on less risk.

Santa Monica Chief Deputy City Attorney Lance Gams said municipalities are already hit with too many bogus police abuse and other shady claims.

“In the course of a year, we will get ten or 20 lawsuits that I’ll take a look at and I’ll say, 'wow, this is a crazy lawsuit',” Gams said.

He said investors’ desire to make money should keep them away from sketchy cases.

“I don’t think that people are going to be wanting to stand in line to invest where the risk is very high,” he said.

But sometimes cities and counties settle lawsuits even if their lawyers believe they lack merit because they’re unsure if a jury will see it their way, said Loyola Law School Professor Jessica Levinson , who also sits on the Los Angeles City Ethics Commission.

“There may be a case which, frankly, pulls at all the emotional heartstrings, and is a case that is very appealing to funders, but legally speaking doesn’t stand on particularly strong ground,” she said. “As it stands now, plaintiffs attorneys kind of act as a gatekeeper."