“Mass torts” are product liability claims against pharmaceutical, medical device, and toxic substance manufacturers. We only bring claims against exceptionally large and profitable product manufacturers, and never against physicians or nurses.
Our business strategy is to focus primarily on case types that are in “settlement mode” – i.e., the defendant/manufacturer has suffered so many adverse verdicts that it has decided to throw in the towel and has set aside several billion dollars – or in the case of Monsanto, more than $10 billion each – to settle those claims. Currently we are pursuing six case types: NEC Infant formula, mesothelioma, Roundup, hernia mesh, sexual abuse / sexual assault, and Elmiron cases.
Toward the end of the life cycle of a case type, mass tort law firms typically negotiate a settlement matrix with the defendant, specifying that a case with these characteristics is worth $X. Once a case type is in settlement mode, the processing of a settlement is remarkably streamlined. Paragon utilizes a major legal process outsourcing (“LPO”) firm to process the settlement. Typically six steps are involved:
- The prospect signs a Client Engagement Agreement and HIPPA Authorization Form.
- The prospect’s medical records are obtained from the pharmacies, physicians and hospitals identified by the client.
- The medical records are then analyzed by legal nurse practitioners or other highly skilled individuals.
- The medical records are “worked up” into a format specified by defense counsel, typically in a Microsoft Excel spreadsheet, and are then submitted to such attorneys.
- A lien resolution company negotiates with valid lien holders. For example, in many cases mass tort clients (who in most cases are earning below the median income level) have not paid their hospital bill. A lien resolution company might negotiate, e.g., that the hospital receives 25 cents on the dollar. The lien resolution company is paid out of the client’s share of the settlement.
- Typically the client receives 60 percent of the settlement, while Paragon’s affiliated law firm receives 40 percent. Any monies owed to Paragon’s investors are paid directly to such investors by the LPO firm out of the law firm’s 40 percent.
When a case type is in settlement mode, notice what is typically not required:
- The law firm is not required to file a lawsuit in the MDL (multidistrict litigation).
- The law firm is not required to file a Short-form Complaint.
- The law firm is not required to prepare a Plaintiff Fact Sheet.
- No discovery (such as interrogatories and depositions) is required.
- No motions need to be briefed and argued.
In the past decade, more than three dozen major LPO firms have entered the market. These firms will process the case from “soup to nuts” — i.e., once a client is signed up, they will perform all of the remaining tasks, through settlement and collection and disbursement of the settlement. These firms are willing to defer their fees until settlement funds are collected, which substantially improves Paragon’s cash flow. (Since they collect the settlement funds, the first payment they make is to themselves, for their deferred fees.) Such firms include Archer Systems, Epic Systems, Torticity, Verita Global, and Verus.
Our Customer Acquisition Costs (“CAC”) are approximately $300 per valid case, and our only other variable cost per case is approximately $250 for the client’s medical records. Spending $550 for a case that will generate $40,000 or more in legal fees is an attractive economic investment.