Cherokee Funding Founder and CEO, Reid Zeising, recently sat down with Litigation Finance Journal Managing Editor, John Freund, to discuss business, identifying your life’s passion, and all things legal funding.
Here is a sample of some of the questions Reid was asked, and what his answers were:
John Freund: What are some typical questions you get from plaintiffs?
The top four questions I get asked by plaintiffs interested in securing legal funding are:
How much money can I get?
How long will it take? (To get the funds.)
How much will it cost?
Is this really non-recourse? And, What does that mean?
To which I reply with:
How much money can I get?
I like to answer this with a follow-up question: How much money do you need? Then I spend time talking to them about the difference between needs and wants, encouraging them to take as little as possible to get by and allowing their attorney to maximize case values.
How long will it take?
Cherokee Funding is home of Same Day Funding. We know that many people who apply for legal funding cash advances do so because they are in urgent need of cash. That’s why we created Same Day Funding, to help our clients get the money they need as quickly as possible. There is no credit check required, and our application process is fast, easy and comes at no cost to plaintiffs.
How much will it cost?
The long and the short answer is this: Our contracts vary case by case. Usage rates are fully disclosed and repayment tables outline amounts and timeframes that may be owed if their case is successful. I will also add this disclosure has been a Hallmark of our business since inception; meaning, if something was a best practice in one state, we do it now in every state where we provide legal funding.
Is this really non-recourse?
Yes, legal funding is non-recourse, and it means that if plaintiffs do not win their cases, they do not have to pay their legal funding advances back. For more information, read this article on the primary differences between traditional loans and non-recourse legal funding.
Please explain rolling contracts.What are they, why can they be advantageous to plaintiffs, and when should they be utilized as opposed to large cash advances upfront?
Rolling contracts were one of the differentiating factors when we first got started, because nobody else was doing them. I also believe rolling contracts are in plaintiffs’ best interests and that every single legal funding provider should be offering them. When I got into the legal funding business, the focus was on advancing as much money as possible, where repayment was benefiting, and still is in some cases, the funding company as much as possible. We fundamentally disagree with this, which is also why we provide for needs, not wants.
Rolling contracts in legal funding are essentially installment plans, where as little as possible is given to plaintiffs at a time.
The average American can last a month, maybe a month and a half, without a paycheck and insurance companies know that. They know people’s socioeconomic history, where they were working, and how much they were making.
Consider this, insurance companies have two major advantages over plaintiffs: They have time and they have money; they have the checkbook and they’re in new hurry to write it, and that almost always works to the detriment of the plaintiff.
When someone comes to Cherokee Funding and says, “I need money.” I say, “No, you need time.”It’s like playing a game of chess instead of checkers.
Lastly, I would add that I have never witnessed a single plaintiff out of the tens of thousands I’ve come across in my career not wish that whatever happened to them didn’t happen. They don’t retire and move to the Bahamas from these situations like some people will have you believe; I’ve only ever seen their lives turned upside down. At Cherokee Funding we take our role as these people’s lifelines very seriously, and attempt to provide only what is needed.
Responsibility in the legal funding industry is paramount, in my opinion.
On the docket for discussion was also how Cherokee Funding got its start, the company’s focus on values and transparency and business advice for future legal funders.
John Freund: What advice would you give to someone considering getting into this business?
The focus in legal funding is on underwriting and risk management, and how you apply that to case evaluations. I really encourage someone considering getting into this business to avoid putting large amounts of money in plaintiffs’ hands in short amounts of time. Pay attention to the details: Is there clear liability? Is this the type of case that has been settled in the past? What was the outcome? The new funders that get in trouble are the ones that don’t understand risk management and that don’t pay attention to past rulings.
To listen to the full podcast, go to: https://litigationfinancejournal.com/podcast/episode-10-reid-zeising-founder-ceo-cherokee-funding.
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