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Litigation Funding & The Invisible Gorilla

Litigation Funding & The Invisible Gorilla

The following post was submitted by Dean Lipson, Partner of Covered Bridge Capital. Ever hear of the psychological experiment known as the Invisible Gorilla?[1]  It goes like this: You’re asked to watch a brief video of a group of people moving randomly about in a pack. Several of these people are wearing white shirts and passing a ball amongst themselves. You’re asked to count the number of passes that occur. During the video, a person dressed as a gorilla enters the middle of the pack and, while facing the camera, thumps his chest for a few seconds then exits. The video ends and you’re asked to give the number of times the ball was passed. Most likely, you get that right. You’re then asked if you saw the gorilla. Huh, what gorilla? Yes, despite being on-screen for 9 seconds, half of all participants in the experiment never see the gorilla. Ever hear of the lawsuit captioned Avery vs. State Farm?[2] It goes like this: 20 years ago, an Illinois jury awarded $456 million to plaintiffs in an action against State Farm for its use of inferior car parts in car repairs; conduct which violated State Farm’s own insurance policies. Following a finding of fraud, an additional $730 million was added to the verdict bringing the total to roughly $1.2 billion. That amount was then reduced to $1.01 billion on appeal. State Farm wasn’t done though. It filed yet another appeal, this time with Illinois’ highest court, which granted State Farm the ultimate victory: The verdict was completely overturned. The events of Avery gave rise to a second suit against State Farm. In Hale vs. State Farm[3], the Avery plaintiffs alleged State Farm had not only orchestrated the recruitment of Lloyd Karmeier but also had secretly bankrolled his successful bid to be become an Illinois Supreme Court Justice in 2004[4]. Why? Because the Avery case was on appeal at that time and Justice Karmeier would now be available to influence its fate, which is precisely what happened.  Hale was filed in 2012 and it alleged the events leading up to, and following, the Karmeier election violated the Racketeer Influenced and Corrupt Organizations Act (RICO). Again, the assertion here was that State Farm had organized and managed Karmeier’s campaign behind the scenes; that State Farm had covertly funneled millions of dollars to support the campaign through intermediary organizations over which State Farm had exerted considerable influence. Hale dragged on for 6 years before settling in 2018 for $250 million. The settlement was approved on the basis that only one of roughly 5 million plaintiffs objected. Well, with the claim now going into its 20th year and with individual net recoveries averaging less than $50, it’s a wonder anyone made the effort to object. It’s unfortunate Hale settled and the public was denied a look behind the curtain. Still, the circumstantial evidence is ample and more than enough to suggest the insurance giant pulled strings and levered its enormous influence to achieve that which it could not before a jury.  That’s a huge problem. But we have an even bigger problem: you and me. The State Farms of the world will always rent-seek and will always attempt to change the rules of the game to ensure their victory. We know this. The problem is that you and I aren’t doing enough to stop our country’s seemingly inexorable slide from democracy into corporatocracy?  We’ve become jaded, resigned, disenfranchised and, according to experts, blind; blind to what’s around us and blind to the very fact of our blindness.[5] That’s the takeaway from the Invisible Gorilla experiment. We come to litigation funding. The naysayers want to frame it as a problem but it is in fact a solution born of a problem. Corporate America continues to accumulate power while you and I continue to lose ours in this zero-sum battle. Isn’t that the real problem here? Come on, don’t you see the gorilla standing right in front of you thumping his chest? Dean Lipson Covered Bridge Capital, LLC “The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge” -Stephen Hawking — [1] www.theinvisiblegorilla.com [2] https://www.bloomberglaw.com/public/desktop/document/AveryvStateFarmMutAutoInsCo321IllApp3d269254IllDec194746NE2d1242A/1?1552679577 [3] https://www.bloomberglaw.com/public/desktop/document/HalevStateFarmMutAutoInsCoNo120660DRH2018BL462903SDIllDec132018Co?1552677329 [4] In the most expensive judicial election in United States history to that point, Justice Karmeier won the open seat. Ahem, he beat Appellate Judge Gordon Maag who wrote the Avery Appellate Court opinion against State Farm. [5] www.theinvisiblegorilla.com
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Karyn Cerulli Joins High Rise Financial to Bolster PI Funding

By John Freund |

High Rise Financial has added industry veteran Karyn Cerulli as Regional Vice President of Sales, deepening the Los-Angeles-based funder’s reach into the personal-injury bar. Cerulli spent more than a decade with FindLaw and Thomson Reuters, where she partnered with firms on digital marketing and business-development strategies. In her new role she pivots from lead generation to liquidity, positioning High Rise’s non-recourse advances as a client-care tool for plaintiffs’ firms facing lengthy litigation timelines.

A post on LinkedIn sets out Cerulli’s agenda: hands-on attorney support, a “best rate guarantee,” and white-glove service that places “zero pressure” on case strategy while delivering cash within days. Cerulli frames High Rise as a complement rather than a competitor to existing funders, inviting firms to keep her on standby as a “second option” or safety net when primary partners stall or pricing shifts.

The move comes amid rapid growth for High Rise, which secured a $100 million senior credit facility late last year to expand its pre-settlement portfolio and medical-lien program. The funder touts 24-hour approvals, no credit checks, and repayment only from a successful resolution—features that resonate with Cerulli’s long-time focus on consumer-friendly legal services. With her network of plaintiff-side marketers and case managers, the company hopes to accelerate origination across high-volume auto and premises claims.

Golden Pear Upsizes Corporate Note to $78.7M Amid Growth Plans

By John Freund |

Golden Pear Funding has extended and upsized its investment-grade corporate note to $78.7 million, further bolstering the firm's capacity to serve the expanding litigation finance sector. The New York-based funder, a national leader in both pre-settlement and medical receivables financing, said the proceeds will support working capital and fuel strategic growth initiatives.

A press release from Golden Pear outlines how the capital raise reflects continued investor confidence in the firm’s business model. CEO Gary Amos noted that the infusion is critical as Golden Pear seeks to scale alongside the “rapidly expanding litigation finance market.” CFO Daniel Amsellem added that the new funding aligns with the company’s capital allocation strategy, aimed at optimizing operational efficiency and executing strategic projects.

Brean Capital, LLC acted as the exclusive financial advisor and sole placement agent on the transaction.

Founded in 2008, Golden Pear has funded more than $1.1 billion to over 87,000 clients and remains one of the largest specialty finance companies in the U.S. Its business model spans legal case funding and medical receivables purchasing, with backing from a network of private equity partners that provide institutional support for continued expansion.

Mayfair Legal Launches Wildfire Support Program for Plaintiffs

By John Freund |

Mayfair Legal Funding has unveiled a new initiative aimed at aiding wildfire victims in Los Angeles and Maui by providing pre-settlement advances tailored to individuals pursuing legal claims related to recent wildfire disasters. The program seeks to ease the financial burden on plaintiffs during the lengthy litigation process, allowing them to cover essential living expenses and medical costs without being forced into early or inadequate settlements.

An article in OpenPR reports that Mayfair’s program will provide wildfire-impacted claimants with cash advances while their cases proceed through court or settlement negotiations. The funding is non-recourse, meaning recipients are only obligated to repay the advance if their case is successful. This offering is particularly timely in light of the mounting legal battles related to utility-sparked wildfires in California and the catastrophic 2023 fires in Maui, both of which have left thousands seeking legal recourse and financial recovery.

Mayfair emphasized that this initiative aligns with its mission to ensure access to justice regardless of a claimant’s financial status. “We believe that no one should have to choose between basic survival and pursuing a rightful claim,” said a spokesperson for the funder, noting that the company’s underwriting process is designed for speed and minimal paperwork.

With natural disasters on the rise and litigation timelines stretching longer than ever, targeted pre-settlement funding like this may become an increasingly vital tool for plaintiffs. The wildfire-specific program from Mayfair underscores a growing trend of funders developing specialized products for mass torts and disaster-related litigation—an area likely to see heightened investor and regulatory attention in the years ahead.