Jeremy Alters:
If they borrow $5,000 or get funded $5,000, and they got to pay back 40,000.
Chris Dreyer:
Banks and credit card companies slammed your injured clients with compounding interest rates. Or at least they did, because that's how litigation funding worked until Jeremy Alters decided to break the system.
Welcome to Personal Injury Mastermind, the show where ambitious attorneys come to learn, implement, and get results. I'm your host, Chris Dreyer, founder and CEO of rankings.io, the SEO agency of choice for elite personal injury law firms.
Today, Jeremy reveals how ClaimAngel is dragging a shadowy industry into the sunlight. By capping interest rates and building a transparent marketplace, they're forcing traditional funders to compete for the first time.
Jeremy Alters:
The quote is, "You're ruining the industry." And you know what I say to them? "That's the goal."
Chris Dreyer:
We explore how a tech-driven marketplace gives power back to the people who need emergency funding the most. This is a story about turning an opaque relationship-driven business into a true marketplace for fair rates and speed wins.
Here's Jeremy Alters, CEO of ClaimAngel. Let's dive in.
Jeremy Alters:
A couple of friends of mine that are founders of the company on a PI shop in Boca Raton, Florida. And I used to practice law for 22, almost 23 years. I never used funding in my career. I never liked funding. I thought it was too expensive, too predatory, too dangerous for the claimants, too difficult to settle cases with, so I stayed away from them. They brought me this idea about making funding competitive and creating an ecosystem of funding both from the claimant side, from the attorney side, all the way through to the funder side.
Chris Dreyer:
Can you describe the current state of litigation funding and why there's a need for greater transparency in this ecosystem?
Jeremy Alters:
In any other aspect of life outside of litigation funding, you find transparency in everything these days. There's Uber, there's Lyft. Go down the list of marketplaces that exist to make the consumer's life easier, to create competition for pricing. With our tech-driven society, this is what we should be doing.
ClaimAngel saw a need for that exact same thing in litigation funding, and litigation funding has always been gray. And I use that term, gray, kindly. It is lawyers and their buddies getting claims funded, companies that... They have relationships that get the claimants money. And that's fine, but getting them money at exorbitant predatory interest rates is the worst possible thing for claimants. And ultimately at the end, it's the worst possible thing for attorneys, because if they borrow $5,000 or get funded $5,000, and they got to payback 40,000, they're never going to be able to settle those cases.
So we saw a need to fill that gap and create full transparency, where the consumer can see everything, the lawyer can see everything, they know exactly what they're going to pay. And the biggest thing we get for claimants, is we capped the interest rate at 27.8%. Our goal is to be better than their credit cards. The average consumer credit card for lower income consumers in the United States is 31.99%, believe it or not. It's crazy. So we said 27.8% is better than their credit card. We cap that at 2X, so you cannot run away. If you borrow or get funded $5,000, $10,000 maximum. And that $10,000 does not accrue until 43 months. In the United States most cases settle well before 43 months.
No monthly payment, fully non-recourse. No one in the industry can do it. ClaimAngel is not a funding company. We are a marketplace that has funders and attorneys bring clients together to get the lowest rate. They can even name their own price, and we are promoting competition at the mandated lowest rate.
Chris Dreyer:
You mentioned your rates versus the credit cards. What are some of these bloated rates that individuals are getting? And then also, could you also just define what non-recourse is for maybe some of the audience that aren't aware of that?
Jeremy Alters:
Non-recourse means you get the money, you get funded. And I keep correcting myself when I say borrow or loan, because it's not a loan, it is a funding, and that funding is basically a purchase interest in the case. So the funding company is purchasing an interest in the claimant or the plaintiff's case. If that case is lost, the claimant does not have to pay the money back. That's why it's called non-recourse. There is no recourse if the case is lost. If the case is won, it gets paid from the settlement. That's the key to all of these things.
Chris Dreyer:
With the non-recourse, and you taking on risk, that's the name of the game, is you're participating in some of the risk, what's the size of some of these claims? Are you looking at credit scores and stuff, and like, "Hey, you're..." How does that process work in terms of the size?
Jeremy Alters:
Not looking at credit scores, we have funded everything from $500 to $2 million, so everywhere in between. The claims that get funded between $500 and, let's say, 25,000 fundings, those are funded pretty quickly. They don't require a ton of information or documents, but a little bit, and we get them funded. When you start getting funding outside of 25,000, the funding companies need a few documents, police report, dec page, some medical records, and a really good description.
So we ask the attorneys, while they're not allowed to put a cap on the funding, legally, we ask them if there's a range that the case warrants, so that it doesn't get to be too much, and then we advise our funders of the value of the case and they make their decision. Most funders will fund 10 to 12% of the value of the case, and sometimes they don't do that all upfront, and the claimants don't have to incur interest. It can be spread out over months. It can be done in smaller amounts, and they can come back for more money when they need it. If they're paying their monthly bills, and that month they need $2,000, and the next month they need $2,000, we'll do that sort of thing also.
Chris Dreyer:
If the individuals go to, say, a bank for lending, are most of those going to be a recourse? They're collateralizing to get the debt, and then that's one of the true benefits, is like, "Here you go. We're not going to take your house"?
Jeremy Alters:
That's right. That's exactly right. Most people who need this money... There's three categories. They need it because the accident happened, or they should take it because it's better than their bank rate or their credit card rate. If someone was in position to go to a bank and get a loan temporarily, they don't need this money. They can go get a prime plus loan. They can do that, but they're not the consumer for this money. Credit cards more than banks are fully recourse loans. You are signing away your rights to any money, and you have to make a monthly payment. People do not understand what compound interest is, generally speaking. We have no compounding interest. It is simple interest, and every credit card in the United States, every bank loan in the United States for the most part at this level, is compounding interest, which means even if they're charging you 27.8%, by the time it's over, you're actually paying 47, 48, 50, 52, because it compounds. Simple interest is the key. We are simple interest, we are capped, and we are very different from any bank or credit card out there.
Chris Dreyer:
I want to dig into the marketplace that allows you to facilitate this, and from what I research, and you have the updated numbers, I saw over 4,000 cases funded over $25 million, so you've made significant strides. We're talking, this is just the beginning. So can you paint the picture of how the marketplace works, and just give us an idea on that side?
Jeremy Alters:
Two ways that it works for claimants, and keep in mind as a separate note, we also fund attorneys non-recourse as well, but I'll talk about the claimants first. Claimants come to claimangel.com, fill out information about themselves, and tell us the amount of money they need. We then send a form, it's all automated, it's instant. We send an automated form to their attorney, because they would have told us who their attorney and/or paralegal is. We forward that form to the attorney, we get the information we need for the case, and within minutes, assuming that information is turned around, they have a listing on our site. Imagine you're on Carvana, or TrueCar, or one of these sites, eBay, and you see listings for products. It's the same exact thing. We have listings for each claim that's on our site, and we fund 50, 70, 100 of these a day, listed.
They cannot sit on the site because our funders literally have hired people to sit on the site and click reserve when the claim comes up so that they can underwrite it and fund it. It is a rare event that we have more than two or three claims sitting on our site overnight because they're all getting funded within that timeframe. It is a true marketplace experience. The consumer gives us information. The lawyer confirms or gives us further information, information about the case. Let's say it's an auto accident. They tell us a description. We ask for a couple of documents, a police report, a dec page, different things, if we can get them. We don't always need them. And once we get that information, which again, can be in minutes, the claim gets listed, and we've funded people in as fast as an hour.
We've got real-time funding, real-time ACH. We also do Zelle, Venmo, check. As automated as you can get, Chris, that's what we're trying to do. We even do Western Union, although check and Western Union are the least automated, we do do that as well. And we've got a flood of cases that come in from firms. And once the firms use us once or twice, and they understand that partnering with us... And this is another really important point, Chris. Partnering with us protects their ethical and fiduciary duty to their client.
Chris Dreyer:
Absolutely. I want to just break these down. Okay, so there's some clear benefits for the consumer, there's benefits all around. What are some of the main reasons why an attorney wouldn't use ClaimAngel as opposed to getting these bloated loans? Is it just the, hey, they're buying you Knicks tickets? What's the really underlying reason here?
Jeremy Alters:
It's convenience, number one, meaning they have relationships with people... funding companies, I should say. Those relationships are sometimes longstanding. They involve gifts, they involve Knicks tickets, or Suns tickets, or Dolphins tickets, or whatever it is, golf outings, trips, you name it. But there's also the funder. They pick up the phone, they call a funding company they have a relationship with, and sometimes they will fund that from the phone call in two seconds because they know the lawyer.
Now that sounds really good for the claimant, but why would a funding company do that? That they know even if they lose a couple cases, they're still making an exorbitant amount of interest. We don't believe in that. We believe in getting the data, promoting the competition, having full transparency. We also meet your fiduciary duty, and you don't do this when you have other companies and you're just funding with one. We've got 15 funding companies on our site. We've got 11 on the waiting list. So there are 15 eyeballs from those companies, those various companies, looking at your claimants' claim to fund, and that means you've given them multiple options. So lowest rate, multiple options, and no other funding company can do this. And again, I want us to restate, it's because we're not a funding company that we can do this. We are reducing the overhead for funding companies, and we are partnering with funding companies to do this.
Chris Dreyer:
There's like this balancing act with network effects, right? You need a thriving marketplace with a lot of high quality attorneys, as well as the funders, and all this. So what's the balancing act? You said you have this on the waiting list, so what's the criteria to become a funder? What's the criteria to have the firm even have the ability to do this? Because I'm sure you take out the bad apples in the marketplace.
Jeremy Alters:
Starting with the funding companies, we do our full KYC to make sure that they are compliant and meet the rules required for funding. We have 11 on the waiting list because I need more volume to make it worth their while. We've got volume that is satisfying 6, 7, 10 funders, but to satisfy 25, 30, we need more volume. We need more law firms to send their claims and see how ClaimAngel works to prove that it's the best model out there. That's number one.
For the attorneys, it is the protection that is offered. They want to protect their clients. We want them to protect their clients. We offer that protection for them, and it is almost seamless in the sense that rarely is there even a phone call needed. It is literally automated transactions, that once you do it once or twice, the paralegals love it. Our funders love it, our attorneys love it, paralegals love it.
And the funders, just so you know, we are at full one-touch funding for the funders. So they can go on there, look at the claim, look at the documents, and click send contracts, and that claim is signed, the contract is signed, and the claim is funded all in that one full step. So we are a one-touch funding. We're mirroring Amazon in that regard. When we get to partner with attorneys, Chris, and law firms, we get to one-touch funding on the claimant side. And the faster we get, the more efficient we get, and this will not be a gray part of the industry any longer if we do it right.
Chris Dreyer:
To me, this seems like such a no-brainer. It's like, do you go to the AAJ and the American Bar Association, and be like, "Look, here it is. You guys want to do right for the consumer and your space." Do you put it in their hands? Have you got any feedback from some of those players?
Jeremy Alters:
Yeah, we've gotten feedback. We've got feedback from a lot of people, some of it favorable, and some of it, the quote is, "You're ruining the industry." And you know what I say to them? "That's the goal, because the industry shouldn't be the way it is. It should be clear and transparent." Here's our phrase, Chris. "Fair funding for all." That's our motto. That's our tagline. "ClaimAngel, fair funding for all." And that is the ecosystem.
Chris Dreyer:
What started as a mission to fix predatory funding has evolved into something unexpected, a solution where everyone wins. Attorneys are discovering that ClaimAngel just doesn't save their clients money, it makes their practice more efficient. No more phone tag with funders, no more explaining high interest rates to clients, and most importantly, no more watching settlement negotiations fall apart because of astronomical funding paybacks. Through one transparent marketplace, cases get funded in hours instead of weeks. Clients get rates capped at 27.8%, and attorneys, they get the peace of mind knowing they secured the best possible terms for their clients, all while meeting their fiduciary duty. The old guard called it ruining the industry. Thousands of successful cases later, attorneys across the country are calling it the future.
I'm Chris Dreyer, and this is Personal Injury Mastermind. Catch you next time. I'm out.
