Michelle Pont can be one of the company’s clients.
She wrestled with accepting a smaller settlement than she considered fair. Then a lawyer referred her to Balance Point Divorce Funding, a fresh Beverly Hills lender which offers to cover the cost of breaking up — paying a lawyer, searching for hidden assets, maintaining a lifestyle — in exchange for a share of the winnings.
In October, Balance Point agreed to invest more than $200,000 in Ms. Pont’s case.
“the idea’s given me trust,” Ms. Pont said. “I don’t view the idea as a loan; I view the idea as an investment in my future. They are helping me to get what can be rightfully mine.”
With some within the financial world willing to bet on almost anything, the idea should be no surprise which a few would certainly see the potential to profit through the often contentious in addition to emotional process of ending a marriage.
So far, the number of companies investing in divorce can be little — Balance Point can be one of the few which do the idea exclusively. nevertheless additional businesses are gearing up. A fresh York start-up, Churchill Divorce Finance, also can be planning to enter the business. The company’s chief executive previously co-founded a publicly traded Australian company, ASK Funding, which has invested tens of millions in divorce cases there.
While This specific business can be in its infancy, Balance Point can be part of a bigger trend — the growing industry which invests in additional people’s lawsuits, arming plaintiffs with money to help them win more money through defendants. Banks, hedge funds in addition to boutique firms like Balance Point today have a total of $1 billion invested in lawsuits at any given time, industry participants estimate.
Lawsuit lenders initially focused on personal injury cases, nevertheless over time they have sought fresh frontiers, including securities fraud cases brought by disgruntled investors, whistleblower claims against corporations in addition to property development disputes.
Stacey Napp, a lawyer by training who has spent her career in finance, founded Balance Point last year with money through her own divorce. Since then, she has provided more than $2 million to 10 women seeking divorces. She says she can be helping to ensure both sides can defend their interests.
“Everybody knows somebody where at the end of the day, the divorce was not equitable,” she said. “We want to help those people, the underdog, to make sure they get their fair share.”
Divorce cases may be a promising niche for lenders because costs can mount quickly — some top lawyers in Los Angeles charge more than $500 an hour — in addition to because state laws uniformly require plaintiffs to pay lawyers upfront, rather than promising them a contingency fee, or a share of any winnings, as can be common in additional civil cases.
The state laws were written to make people think twice before pursuing a divorce. nevertheless Madeline Marzano-Lesnevich, a fresh Jersey lawyer who serves as a vice president of the American Academy of Matrimonial Lawyers, which sets ethical standards for divorce lawyers, said she welcomed the use of divorce financing as a workaround because, in her view, society also has an interest in helping people who are determined to separate.
“the idea furthers the concept of putting both spouses on an equal playing field,” she said.
Ms. Napp developed the idea for Balance Point during an eight-year legal battle with her former husband, which she paid for with loans through family in addition to friends. She filed to divorce David Napp in 2001 after 13 years of marriage. Mr. Napp, an investor in mobile home parks, agreed to pay $500,000 in addition to allow her to keep the family home. nevertheless shortly after the deal was finalized, Ms. Napp was stunned to discover which Mr. Napp was about to sell his stake within the parks for $5.7 million. She asked the court to reopen the settlement, setting off a legal dispute which lasted until the spring of 2008, when an Arizona judge ruled in her favor.
“Somewhere along the way a light bulb went off,” Ms. Napp recalled. “I said, ‘I’m kind of a perfect storm. I know how to find assets, I understand litigation, I have resources — what happens to people who are missing even one of those elements?’ ”
She decided to seed a business with some of the money she had won in Los Angeles, the city of fleeting marriages. Balance Point has since raised additional money through private investors. Ms. Napp said she expected the first case to be resolved later This specific fall, providing her first profit.
Her customers fall into a pattern. They are women. They generally do not have jobs. They often are raising little children. in addition to their husbands run their own businesses, doing the idea tough to obtain financial information.
A stay-at-home mother with three children spent 16 months trying to compel her husband to produce current financial statements for his solo law practice. She was running out of money when Balance Point agreed in August to provide financing.
A woman who signed up in January has used the backing to build a case which she can be entitled to share the value of 17 properties her husband put in a trust for the benefit of his children through a previous marriage. Both women declined to be identified.
Then there can be Ms. Pont, who can be battling her estranged husband, Jeffery D. Pont, over the value of their trucking company. The couple met in 1990. The next year, he bought his first truck with Ms. Pont’s tax refund of $2,300, she said. He commenced a little business carrying ink in addition to printing supplies. Mr. Pont in addition to his lawyer did not return calls for comment. By 1996, the couple had married in addition to the company had rented an 1,100-square-foot warehouse. Ms. Pont said she answered the phones while nursing their first child.
By the late 1990s, there was enough money flowing in for Ms. Pont to stay home with the child. in addition to the company has continued to prosper. The main warehouse can be today 150,000 square feet.
nevertheless she moved out within the spring of 2009 in addition to filed for divorce. The estranged couple has since spent several hundred thousand dollars on lawyers, accountants in addition to investigators. The judge overseeing the case has warned which the total could exceed $1 million if the two sides cannot reach a compromise.
Ms. Pont said the money through Balance Point would certainly allow her to sustain the case for as long as necessary. Balance Point does not charge interest; instead, clients pay the company a percentage of their winnings.
Lawyers who finance additional civil cases generally keep at least a third of the winnings. Ms. Napp said Balance Point required a “substantially smaller” share through clients, though she declined to be more specific.
The company wants to focus on people with marital assets between $2 million in addition to $15 million, a bracket Ms. Napp described as “the lower end of the high end.” She said which investing in smaller disputes was not worthwhile. Wealthier people, she said, seemed to resolve divorces more easily — perhaps because they still felt wealthy within the aftermath. “Anything south of $15 million, when you divide which in half in addition to take out the legal fees, you’re not within the same house, you’re not taking the same trips — your life can be different,” she said. “You can’t maintain which same quality of life which you’re used to.”
Ms. Napp says she urges clients to set aside emotions in addition to negotiate a settlement. Indeed, she says she will not take clients who seem unwilling to compromise, fearing which their pursuit of justice will undermine Balance Point’s pursuit of profit. She cannot compel clients to settle.
nevertheless Ms. Napp concedes which clients are attracted to Balance Point in part because she did not settle her own case. Most lawsuit lenders avoid any role within the management of cases, seeking to disarm critics who worry which lenders seeking profits will corrupt the pursuit of justice. Ms. Napp, by contrast, sells the benefit of her own experience.
Ms. Napp said which as she decided to create Balance Point, she realized which she could not settle her own case. “I had to win,” she said. “Because I don’t know which, if you don’t have a happy ending, which people are going to think the idea’s such a fantastic idea.”