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The Case for Customized Solutions: One Size Does Not Fit All

May 2, 2019

The Case for Customized Solutions: One Size Does Not Fit All

The following article was contributed by Michael Lohrer, Chief Technology Officer of Segue Cloud Services. When it comes to technology for the legal finance community, more often than not market solutions have been designed as pre-set software, produced to function in one particular fashion to address organizational processes or workflows. End-users are often encouraged to give feedback on desired changes and customization, but revisions to the finished product are difficult for developers to fulfill after-the-fact. A pre-determined GUI and set functionality doesn’t always accommodate the ongoing needs of the customer—particularly for those who hope to grow their practices. The marketplace has come to accept the “one-size-fits-all” culture when it comes to business software where scale hinders the economics of customization. This is especially true in sophisticated market niches such as pre-settlement funding, which involves a complicated roster of labor intensive tasks, from contract generation to automated notification of multiple parties, to long-term tracking of the status of each case. Variables in these disciplines are constantly in flux, and each case has its own distinct conditions. Customers, however, are beginning to recognize that the one-size-fits-all mentality is not aligned with their needs, and are interested in finding technology vendors that have the latitude to customize their existing solution so it can be applied to specific business environments or workflows. This approach gives the customer confidence they are choosing a solution that addresses existing business needs. And if these requirements ever change—as they often do—the customer will have an even greater comfort level that the developer can make whatever changes are necessary to keep the technology relevant. Business owners should speak candidly with their technology vendors to determine if their software is designed to accommodate feature and workflow changes. Recognize that business dynamics continuously shift, and there will always be nuances and variables to every case, every new client, and every new stage of your business model as it evolves. The software you employ to help manage your processes and execute your tasks should be able to accommodate those changes, even if they occur mid-stream. For example, if your company takes on a new funding source, or if circumstances arise requiring a change in notifications or workflows, the user should be able to adapt their tools to address these new requirements, and not be expected to change their business practices to serve the limitations of software. When contemplating what type of automation software to implement for your firm, keep in mind that not all solutions take the one-size-fits-all approach. Automation software has been introduced in the market which allows users to dictate everything from the look and feel of the interface, to the ability to modify and add fields or generate notifications as needed, according to user-based rules. Companies are short-changing themselves if they invest in a system that forces employees to bend to the confines of its design—whether that’s regarding look and feel, the protocols by which users access data, or the ability to arrange application fields as they see fit. Look at it this way: Microsoft Windows is the most ubiquitous operating system in the world, yet no two users have the same desktop configuration. Each user benefits from personalizing the interface to best fit his or her workstyle. This ties into the new market emphasis on “WX,” or the “worker experience,” in which the technology and applications in the workplace address the learning styles and preferences of the individual to promote increased productivity and better job performance. Technologies for legal financing companies should emphasize flexibility, not rigidity. Uniformity has held sway for far too long, giving companies limited choices in finding an adaptable solution—but that’s quickly changing. Rather than subjecting the user to restrictions, it’s time to opt for systems that cater instead to business requirements, empowering companies in the legal finance community to thrive and grow. About the Contributor Michael Lohrer is Chief Technology Officer at Segue Cloud Services, a developer of automation software for the legal funding industry. Segue provides cloud-based solutions that help legal financing companies automate and manage all pre-settlement functions, from intake to settlement.

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Consumer

Legal-Bay Hails New York Litigation Funding Act as Industry Milestone

By John Freund |

Legal Bay has praised New York Governor Kathy Hochul for signing the New York Litigation Funding Act into law, describing the legislation as a landmark step that finally provides a clear regulatory framework for consumer litigation funding in the state. The new law represents a significant development for an industry that has operated for years amid legal uncertainty in one of the country’s most active litigation markets.

A Legal Bay press release notes that the legislation establishes a comprehensive set of consumer protections and regulatory standards governing litigation funding transactions in New York. Legal Bay characterized the law as the product of more than two decades of policy development and sustained advocacy efforts by industry participants and consumer access to justice groups. The company emphasized that the statute provides long needed clarity by formally recognizing consumer litigation funding as a non recourse financial transaction rather than a traditional loan.

Under the new framework, funded plaintiffs are only required to repay advances if they obtain a recovery in their legal claims. Supporters of the law argue that this distinction is critical in protecting consumers from additional financial risk while ensuring that individuals with meritorious claims are able to cover basic living expenses during the often lengthy litigation process. Legal Bay highlighted that litigation funding can help plaintiffs avoid accepting early settlements driven by financial pressure rather than the merits of their cases.

Legal Bay also acknowledged the role played by New York lawmakers in advancing the legislation through the state legislature, noting that the law strikes a balance between consumer protection and preserving access to funding. According to the company, the statute promotes transparency, fairness, and stability in a market that continues to grow in both size and sophistication.

Consumer

New York Enacts Consumer Litigation Funding Act Impacting Litigation Finance

By John Freund |

New York has enacted a new Consumer Litigation Funding Act, establishing a formal regulatory framework for third party litigation funding transactions involving consumers. The law, signed by Governor Kathy Hochul in December, introduces new registration requirements, disclosure obligations, and pricing restrictions aimed at increasing transparency and limiting costs for funded claimants.

As reported in Be Insure, litigation funders must register with the state and comply with detailed consumer protection rules. Funding agreements are required to clearly disclose the amount advanced, all fees and charges, and the total amount that may be owed if the case is successful.

Consumers must initial each page of the agreement and are granted a ten day cooling off period during which they may cancel the transaction without penalty. The law also prohibits funders from directing litigation strategy or interfering with the professional judgment of attorneys, preserving claimant and counsel independence.

One of the most significant provisions is a cap on the total charges a funder may collect, which is limited to 25 percent of the gross recovery. Prepayment penalties are unenforceable, and attorneys representing funded plaintiffs are prohibited from holding a financial interest in a litigation funding company. For the first time, consumer litigation funding in New York is brought under the state’s General Business Law, replacing years of relatively limited oversight with a comprehensive statutory regime.

Supporters of the legislation argue that the law addresses concerns about excessive costs and abusive practices while providing clarity for an industry that has operated in a regulatory gray area. Industry critics, however, have raised questions about whether pricing caps could restrict access to funding for higher risk claims.

Consumer

New York Enacts Landmark Consumer Legal Funding Legislation

By Eric Schuller |

The Alliance for Responsible Consumer Legal Funding (ARC) applauds New York Governor Kathy Hochul for signing into law Assembly Bill 804C/Senate Bill 1104, a landmark measure establishing thoughtful regulation for Consumer Legal Funding in the Empire State.

Sponsored by Assemblymember William B. Magnarelli and Senator Jeremy Cooney, this legislation creates a clear framework that protects consumers while preserving access to a vital financial resource that helps individuals cover essential living expenses—such as rent, mortgage, and utilities, while their legal claims are pending.

“I am pleased that the Governor signed this important bill into law today.  It is the culmination of 8-years of hard work on this issue.  This law will provide a sound framework to regulate financing agreements and provide protections to consumers.  I want to thank the Alliance for Responsible Consumer Legal Funding and its President, Eric K. Schuller for working with me to get this bill over the finish line.  I would also like to thank and acknowledge my late colleague, Assemblyman Michael Simanowitz, who was the original sponsor of this legislation.”  -- William B. Magnarelli, 129th Assembly District 

For many New Yorkers, Consumer Legal Funding provides a critical financial lifeline while a legal claim is pending, often for months or years. Injured consumers frequently face lost income and mounting household expenses at the very moment they are least able to manage financial strain. Consumer Legal Funding allows individuals to cover essential living costs, such as rent, utilities, transportation, and groceries, without being forced into an early or unfair settlement simply to make ends meet.

Senator Jeremy Cooney stated: “Today marks a historic step forward in protecting everyday New Yorkers from opaque and often predatory litigation financing practices. For too long, vulnerable plaintiffs have been left in the dark about the true cost of third-party funding, only to see the majority of their hard-earned legal recovery eroded by fees and unclear terms. I'm proud to sponsor this bill that brings transparency, accountability, and basic consumer protections to this industry, ensuring New Yorkers can pursue justice without sacrificing financial security."

Because Consumer Legal Funding is non-recourse, consumers repay funds only if they recover proceeds from their legal claim, if there is no recovery, they owe nothing. This structure protects consumers from taking on debt, preserves their financial stability, and ensures they retain full control over their legal decisions. By enacting this legislation, New York affirms that Consumer Legal Funding supports financial stability and access to justice.

“This law strikes the right balance between consumer protection and financial empowerment, by establishing clear rules of the road, New York ensures that consumers retain freedom of choice, transparency, and access to funds that help them meet their immediate needs during one of the most difficult times in their lives.” said Eric K. Schuller, President of the Alliance for Responsible Consumer Legal Funding (ARC). “We thank Governor Hochul for her leadership and Assemblymember Magnarelli and Senator Cooney for their commitment to fairness and consumer choice. This new law affirms that Consumer Legal Funding is about funding lives, not litigation.” 


Under the new law, Consumer Legal Funding is defined as a non-recourse transaction in which a company purchases a contingent right to receive proceeds from a consumer’s legal claim. The law contains several key consumer safeguards, including:

• Clear Contract Disclosures: All terms, charges, and cumulative repayment amounts must be plainly stated and initialed by the consumer.
• Right to Cancel: Consumers have ten business days to cancel a contract without penalty.
• Attorney Oversight: Attorneys must acknowledge reviewing mandatory disclosures and are prohibited from accepting referral fees or having a financial interest in funding companies.
• Prohibited Practices: Funding companies may not influence settlement decisions, mislead consumers through advertising, or refer clients to specific attorneys or medical providers.
• Registration and Reporting: All funding companies must register with the State of New York and file annual reports, and meet bonding and disclosure requirements.

The act takes effect 180 days after becoming law and marks another milestone in advancing consumer protection and responsible business practices across the nation.

About ARC

The Alliance for Responsible Consumer Legal Funding (ARC) is the national trade association representing companies that provide Consumer Legal Funding—non-recourse financial assistance that helps consumers meet everyday living expenses while their legal claims proceed. ARC advocates for policies that protect consumers and ensure access to fair, transparent, and responsible funding options.