High Rise Financial, a litigation finance firm based in Sawtelle that focuses on plaintiff pre-settlement funding for personal injury cases, has its sights set on growth – most recently securing a $100 million senior secured credit facility.

Founded by twin brothers Mark Berookim and Michael Berookim in 2016, High Rise provides funding to clients waiting on the outcome of a personal injury lawsuit, often the result of a vehicle collision, defective medical device or wrongful death. 

“The service is very helpful to so many people who, for example, may be out of work or not working due to their injury. They can’t pay their bills, they can’t pay rent, and that’s where we come in and help them quickly,” Michael Berookim said, adding that funding only takes one or two days to come through upon approval.

While the majority of the business focuses on pre-settlement funding, High Rise also does medical factoring, where the firm purchases the medical accounts receivable at a discount for personal injury cases in situations where medical providers are awaiting payment.

“What we do is take away the waiting time and the risk from the medical providers that treat personal injury victims and pay them quickly so they don’t have to wait years and take a risk of not getting paid at all,” Michael Berookim said.

Pre-settlement financing structure

High Rise’s pre-settlement funding ranges between $500 to $500,000 with an average of $5,000 paid to plaintiffs. Operating in 35 states, the firm puts out about 400 funds per week and has done more than 50,000 to date. The return for High Rise boils down to the lawsuit’s outcome.

If a case does not end in a payout for the plaintiff, High Rise takes a full loss on its loan; however, if the plaintiff does receive a settlement, High Rise is paid back its initial funding plus an additional percentage of the initial amount. 

While it differs from case to case, Michael Berookim said the company typically charges about 30% per year.

So if High Rise gives a plaintiff $5,000 and the case settles in one year, the plaintiff would pay back $6,500 and if the case settles in two years, that would increase to $8,000. The average length of time it takes cases to settle a personal injury lawsuit is one to four years, the brothers said.

This payment comes directly from the plaintiff’s settlement and is given to High Rise from the law firm representing the client, though the Berookim brothers said they don’t always see the entirety of their return. This could be because the case didn’t settle for as much money as anticipated, the plaintiff has excess medical bills, or the case took a significant amount of time to settle, making High Rise’s compounding fees superfluous.

Scott Cummings, a professor of legal ethics at UCLA School of Law, acknowledged the potential pros in receiving litigation funding for those struggling to make ends meet due to their injuries, but also outlined potential ethical concerns.

“Lawyers are ethically constrained in their own ability to advance funds to their clients for those kinds of necessities,” Cummings said. “So having a third party come in and be able to do that is potentially a benefit, but the devil seems to really be in the details.”

Dubbing this structure as “an extremely high interest rate” considering cases can take several years to settle, Cummings said the plaintiff could end up forfeiting “a significant amount of the settlement to the finance company.”

On the other hand, Mark Berookim said the pre-settlement funding can sometimes allow the plaintiff to stay in the game a bit longer, giving them the chance to wait for a larger settlement, rather than being forced to take the first offer due to urgent financial obligations.

“We’re really giving the little guy some ammo to get what is fair, because if they’re going to be (evicted) and the case is worth, let’s say, $100,000, sometimes (the at-fault party) might offer $10,000 and (the plaintiff) might have to accept because they’re desperate to pay their rent and not be in the streets,” Mark Berookim said. “What I hear from law firms is that it does help even the playing field to get what is a fair and reasonable settlement for the (plaintiff’s) pain and suffering.”

Michael Berookim echoed this point, adding that clients should take as little funding as necessary for lower fees.

Finding and evaluating cases

The majority of High Rise’s cases are sourced from relationships the firm has built with specific lawyers and law firms, Mark Berookim said, though High Rise does not have any formal partnerships.

While High Rise does get good foot traffic from direct marketing to customers, the Berookim brothers said the rejection rate for those applicants is higher and so, building relationships in the industry is the priority.

“With law firms that we work with regularly, their cases are more likely to get approved… because we have data with them and a relationship,” Mark Berookim said.

In terms of these unofficial networks, Cummings said it’s important for companies like High Rise to maintain some level of distance.

“It would be important that the lawyers were operating at total arm’s length from these finance companies, in the sense that they weren’t gaining any specific benefit from the companies for referring clients to them, because that would be improper, and raise a conflict of interest,” Cummings said.

With High Rise’s business model, scouting winnable cases is crucial.

Currently, High Rise screens potential cases through questionnaires which are customized based on the type of case and sent to the plaintiff’s attorney. After evaluating responses, High Rise’s team of underwriters will answer Hamlet’s age-old question: to fund or not to fund?

When evaluating the strength of a personal injury case, it’s important to look at the lawyer’s ability to strongly prove causation between the plaintiff’s injury and the at-fault party in question, as well as the extent of their injuries, Cummings said. 

“There are also questions about other ancillary consequences to physical injury, like loss of wages, personal emotional impacts, impacts on relationships. That can be also quantified as part of the damages,” Cummings said.

As for innovating the evaluation process, AI could be influential in this industry as time goes on.

“Eventually AI could help a lot with underwriting, especially the straightforward cases,” Mark Berookim said. “I’m excited about what the near future (could bring) and what the software will be.”

While High Rise does not disclose data on successful versus unsuccessful cases, Michael Berookim said the industry standard is about a 10% loss for this line of business.

Growth and funding

Eight years in the making, High Rise was slow to gain traction for the first few years. 

“(Litigation finance) is an extremely saturated business… so it was extremely tough in the beginning, but we offered a good service… and little by little, we grew on these law firms, and we started getting accounts,” Michael Berookim said. 

In the fourth year, High Rise began to see significant progress with accounts, new hires and a better network. Then especially in the last two years, the firm “put the pedal to the metal,” as Michael Berookim put it.

Currently offering its services to 35 states, High Rise generally gets the most traffic from the largest states and most metropolitan cities. Los Angeles definitely fits that bill and because the Berookim brothers are SoCal born and raised, they find the majority of their business here in California due to the opportunities and connections they have built throughout the years.

Having recently closed its largest funding round yet – a $100 million senior secured credit facility from a network of bank lenders in September – High Rise plans to continue to, well, rise.

“Our overall goal is to be one of the largest litigation finance companies in the nation,” Michael Berookim said. “Obviously, that’s going to be extremely difficult but with enough hard work, talented individuals to join our team and a little bit of good luck, anything is possible.”