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My Journey on Passive Income that 99% Population Don’t Hear About 12 – Risks？
Continuing from last post, I asked him about the success rate of all his cases so far, and whether he had gone through the claims process with the ATE insurance in the event that settlement amount was not enough for his disbursement amount on any file. He explained that the cases themselves were pretty standard to process and out of his several hundred cases up to today, only one couldn’t recover costs (which was the only time he actually went through ATE), so the overall success rate for the cases themselves was definitely over 99%. He also shared that the one time he used ATE insurance, the refund process was pretty smooth without any issue to recover his full disbursement funds.
He mentioned that he also does medical malpractice cases now, but those files were high risk and high rewards, so he only used his own money to fund those cases. Adding to that, he explained that the reason for not borrowing disbursements on these cases was because the legal framework for these cases did not guarantee the recover of disbursement funds in winning cases, therefore ATE insurance company wouldn’t offer ATE insurance on these cases. He also smiled and indicated that he would work on changing the laws on that aspect (as he already changed laws in Canada twice before) so in the future, if the laws indeed change and ATE insurance could enter this space for medical cases, he would consider borrowing disbursement loans.
I laughed. I knew the risk level for the car accident cases were low, so I wrapped up discussion on that part and moved on to another level of risk: personal risk. I directly told him that I’m not concerned about the outcome of the cases because I’ve gone through the entire process, and I’m well aware of the chances of winning. In my view, the theoretical maximum risk doesn’t come from the cases themselves but from the possibility that he would give up his license and take the funds and run.
He laughed and agreed, explaining that due to confidentiality agreements (lawyer-client privilege) between clients and lawyers, he cannot disclose any information about the cases. Therefore, theoretically, that is indeed a risk. He advised me to make judgement calls based on a few points. Firstly, whether the lawyer you’re lending money to frequently changes addresses or law firms. If they do, there might be a problem. He pointed out that he has stayed at the same address for decades, and his law firm has remained unchanged. Secondly, whether the lawyer is a newcomer to the field. He, with nearly a thousand cases and decades of experience, is not a newcomer. Thirdly, whether the borrowed amount is significant enough to make the lawyer give up everything and just run. In other words, you can compare the lawyer’s current income and future level with the loan amount. If the income is already high enough, no one would be foolish enough to take a small sum now, give up everything and run, including the current caseload, lawyer’s license, and a future life of high, nearly risk-free, steady and stable income.
Going with the flow, I then asked: “So, what’s your income level?” Hahaha! Till next time!