Plaintiff

Funding

What is a multi million dollar award worth years down the road, when your family needs to eat today?

P. Daniel Villagómez

Interest

A dollar today is worth more than the value of a dollar in the future; one of the basic precepts of the value of money. Our interest rate is set to find the equilibrium where the amount of money later is greater than the amount of money today, by considering the inherent risk involved in litigation financing.
Plaintiff Funding, unlike Law Firm Financing and Medical Factoring, IS RARELY A LOAN, it is mostly allocated as a non-recourse funding instrument. This allows the industry to charge a Use Fee which is paid back with a portion of the plaintiff’s award. This Use Fee reflects the amount of capital and time the capital is at risk. Many financial institutions determine the amount in a percentage above the capital being deployed, it can be simple interest, but almost always compounded interest. Villagomez Capital will invest in funding mostly around 3.5% compounded monthly Use Fee.
Our proprietary algorithms mitigate risk, and offer Alpha.

New York City

Unlimited

Liability Limits

Personal injury lawsuits against New York City offer unlimited bodily injury coverage, as this municipality is self-insured and possesses a larger budget than most countries.

High Value

$1,000,000.00+

Liability Limits

Villagomez Capital has focused on cases with over $1,000,000.00 in bodily injury insurance coverage. Typically, there is a base policy with secondary coverages that allow cases to potentially receive eight-figure awards.

The Competition

10%

Of the case value

Most funding companies view underwriting the wrong way; they aim to deploy only 10% of the case value, leaving a significant amount of revenue untouched. V ariables such as the quality of doctors and their reports, the history of lawyer awards, and emotional factors like the plaintiff’s likeability are factored into our proprietary algorithms to maximize profits.

VC Equity

Of the case value

25%

Villagomez Capital has focused on cases with over $1,000,000.00 in bodily injury insurance coverage. Typically, there is a base policy with secondary coverages that allow cases to potentially receive eight-figure awards.

We underwrite based on average surgery values as per average insurance company awards, usually less than real potential. We can modify it once we know other variables, like litigation law firms, insurance companies, etc

A plaintiff has been diagnosed with TBI, undergone cervical fusion, and had arthroscopy of the knee performed; the conservatively estimated case value would be $3,650,000.00.

The client’s portion of this award is 2/3, or $2,433,333.33. We aim to own 25% of that potential award, resulting in a Payoff amount, including compounded interest, of $608,333.33.

The exact principal repaid on the $608,333.33 would fluctuate depending on when and how much was disbursed. On average, the principal would be around $150,000.00, assuming even distribution of funding at a 3.5% monthly compounding rate over a 5-year period.

It is not ideal to front-load a plaintiff with funding, as most law firms tend to do by manipulating funding companies. Law firms attract high-liability clients by offering them funding of tens of thousands of dollars on the same day or within days of the accident date. Funding companies, lacking strategy and using Other People’s Money (OPM), capitulate. Villagómez Capital does not! We educate; we simply show the client the numbers. Our client managers have detailed scripts that explain the numbers and the realities of a strong case.

The result of frontloading is that plaintiffs receive less funding and become upset when they realize they received so little in principal compared to the interest they have to pay.

Funding can be used for anything the plaintiff wants, as long as the case’s value justifies the financing. Consistent monthly funding for bare necessities is ideal, allowing for occasional big-ticket items such as emergencies, holidays, surgeries, etc.

If the same plaintiff mentioned in the previous example had an accident on this day five years ago, they would have been funded $2,500.00 every month and $5,000.00 every December. That client would have 59 contracts. The following table would display all the fundamental data. These contracts include a total of 20% on and off-contract fees for our brokers and joint ventures.

Remember, the $3,650,000.00 is a conservative award, providing us with a buffer since we target firms that receive eight-figure verdicts. A case like the previous example could result in a verdict of $15,000,000.00 or more, which would likely be appealed by the defendant and settled in the high seven-figures to low eight-figures.

Our goal is to own 25% of that potential award, resulting in a Payoff amount, including compounded interest, of $608,333.33. At $678,928.19, we are comfortable with the additional funding because of the variables we have factored into our proprietary underwriting formulas built into our CRM.

Security of Payment

The litigation law firm always signs a Letter of Protection (LOP) before Villagómez Capital releases any funding to a plaintiff. They may go by different names, but they are all liens. Similar to a mechanic’s lien on a mortgage, this LOP is a directive signed by the law firm receiving the award on behalf of their client that instructs and obligates the plaintiff’s law firm to pay Villagómez Capital when they receive remuneration from the claim.