Defined Terms

Note: This list will grow until the model contract is complete. Terms already in the list but lacking visible definitions will have those definitions added in the relatively near term, as we post the contract terms using them.

[Acceleration Event: The balance of the Litigation Account falls below [$ ] and the Litigation Counsel in good faith reasonably believes the amount remaining in the Litigation Account is insufficient to finance the conduct of the Claim through to the Milestone Event marking the next Closing. [Despite such certification, an Acceleration Event has not occurred if the Plaintiff and [Funder/Funders holding a majority of issued Litigation Proceed Rights] agree the funding shortfall is due to Attorney Waste, as defined in the retainer agreement. In such case, the related provisions in the retainer agreement shall apply.]]

Award: the total monetary amount owed Plaintiff on account of or as a direct or indirect result of the Claim, whether by negotiation, arbitration, mediation, lawsuit, settlement or otherwise. For the avoidance of doubt, “Award” includes both cash and the monetary value of non-cash assets at the time the Award is paid, and excludes the value of injunctive, declaratory or other non-monetary relief.

Claim: the lawsuit [filed by Plaintiff/Plaintiff will file] against [name] arising from [name’s] breach of [specify], including any refiling, counterclaim, appeal, settlement, enforcement action, arbitration or other action or process related to the lawsuit, whether primary, ancillary or parallel.

Closing: Any or all of the following events, as context requires:

[Acceleration Closing: The sale and purchase of Litigation Proceed Rights 30 days after an Acceleration Event.]

Initial Closing: [Date the Initial Investment is made, location/other description]

Discovery Closing:The sale and purchase of Litigation Proceed Rights eight days after the Conclusion of Discovery.

[Supplemental Closing: The sale and purchase of Litigation Proceed Rights 30 days after a Supplemental Investment Event.]

Committed Capital: [$ ], the total amount pledged to finance the conduct of the entire Claim through to the Conclusion of the Claim [as set forth on Exhibit [ ]].

Common Interest Material: Any discussion, evaluation, negotiation, and any other communication and exchanges of information relating to the Claim in any way, whether written or oral, between or among the Plaintiff, Litigation Counsel, the Funder, and/or the Funder’s Representatives; provided that such communication would be protected by attorney-client privilege, work product doctrine or other discovery protection if not disclosed to a third party lacking a common legal interest.

Conclusion of the Claim: the final resolution of the Claim, whether by settlement, the entry of a non-appealable final judgment against the Plaintiff, or the enforcement of a final, non-appealable judgment in favor of the Plaintiff.

Confidential Information:

Confidential Information shall mean:

(i) the Common Interest Material;

[(ii) discussions and negotiations related to this Agreement, including drafts of this Agreement;]

[ALTERNATE:  (ii) this Agreement, including: (a) its existence and the existence of the financing it provides; (b) its terms; (c) the parties to it; and (d) any discussions and negotiations related to this Agreement, including drafts of this Agreement;]

(iii) to the extent not already covered as Common Interest Material, the Claim, including: (a) information of any type relevant to understanding the Claim; (b) the parties’, Litigation Counsel’s or Funder’s Representatives’ strategies, tactics, analyses or expectations regarding the Claim or Award; and (c) any professional work product relating to the Claim or the Award, whether prepared for Plaintiff, Litigation Counsel, Funder or Funder’s Representatives.

 (iv) [Add customized provisions]
Notwithstanding the foregoing, information is not Confidential Information that (a) was or becomes generally available to the public other than by breach of this Agreement; (b) was, as documented by the written records of the receiving party, known by the receiving party at the time of disclosure to it or was developed by the receiving party or its representatives without using Confidential Information or  information derived from it; (c) was disclosed to the receiving party in good faith by a third party who has an independent right to such information; or (d) is required to be disclosed by law.

Costs: the Costs are the expenses incurred by or on behalf of the Plaintiff for conducting the Claim and complying with the terms of this Agreement, and include: professional fees, whether for attorneys, advisors, experts or witnesses; and procedural fees relating to court or arbitration or other process, including filing and arbitrator fees; provided that the amounts in each case are approved by Litigation Counsel.

Exiting Funder: A Funder that decides to stop funding the Claim prior to the Conclusion of the Claim.

Expected Value: For any given Funder at any given time, the result of multiplying 1.0% of the Initial Claim Value by the number of Litigation Proceed Rights the Funder owns.

Funder(s): [name(s)]

Funder’s Representatives: [name of counsel] and any successor counsel or supplemental counsel Funder retains to represent its interests regarding the Claim.

Funding Shortfall: The balance of the Litigation Account falls below [$ ] and the Litigation Counsel in good faith reasonably believes the amount remaining in the Litigation Account is insufficient to finance the conduct of the Claim through to the Milestone Event marking the next Closing.

Independent Counsel: [counsel name] and any successor or supplementary counsel retained by the Plaintiff to advise on this contract’s terms, amendments and assignments, on settlement proposals, and on privilege issues. Such counsel has and shall have no direct or indirect economic relationship with Funder prior to the Conclusion of the Claim.

Initial Claim Value: [$xxxxx]

Investment: Any or all of the following as context requires:

Accelerated Investment: The amount of money [the/each] Funder invests at an Acceleration Closing.

Discovery Investment: The amount of money [the/each] Funder invests at the Discovery Closing.

Initial Investment: The amount of money [the/each] Funder invests at the Initial Closing.

Supplemental Investment: The amount of money [the/each] Funder must invest at a Supplemental Investment Closing.

Litigation Account: [identify bank account]. The Litigation Account is subject to the Escrow Agreement. Pursuant to the Escrow Agreement, the Escrow Agent shall use the funds in the Litigation Account to pay the Costs and its fee.

Litigation Counsel: [counsel name] and any successor or supplementary counsel retained by the Plaintiff to conduct the litigation of the Claim.

Litigation Proceed Right: the right to receive one percent (1%) of the Proceeds.

Litigation Proceed Right Certificate: a document in the form of Exhibit [ ] (i) reflecting ownership of a certain number of Litigation Proceed Rights; (ii) bearing a legend stating that the certificate and the rights it represents may not be transferred without the express, written consent of the Plaintiff and then only if the transferee becomes a party to this Agreement; (iii) acknowledging the rights and obligations created by Section 5.6 of this Agreement; and (iv) certifying the existence of a perfected senior security interest in the Proceeds Account [and in the Claim.]

Litigation Proceed Right Purchase Price: Each Litigation Proceed Right purchased at a Closing shall cost an amount equal to one percent of the Initial Claim Value multiplied by the relevant Risk Discount Factor.

Milestone Events: The following events: a) Completion of Discovery, [and] b) [Motion To Dismiss Milestone, c) Summary Judgment Milestone and d)] Judgment Milestone.

Completion of Discovery: The date as defined by court order.

Judgment Milestone: The date at which the judge enters the verdict as a judgment.

[Motion to Dismiss Milestone: The entry of an order resolving a motion to dismiss against the Plaintiff.]

[Summary Judgment Milestone: The entry of an order resolving a summary judgment motion against the plaintiff, provided that the motion is dispositive of [the entire Claim]/[identify material issues/causes of action].]

Plaintiff: [name(s)]

Proceeds: (i) Any and all value received to satisfy the Award, if the Award results from settlement or other agreement negotiated by the parties, and (ii) any and all value received to satisfy the Award, less any state, federal or international taxes owed on such value, if the Award is a judgment, order, or other determination by an independent party such as a court or arbitrator.

Proceeds Account:[specify account.]

[Proprietary Information:]

Qualified Replacement Funder: A funder which (a) agrees to become a party to this Agreement; and (b) commits at least as much capital to financing the Claim as the Exiting Funder is withdrawing by exiting.

Re-pricing Event: the issuance of additional Litigation Proceed Rights to existing owners of Litigation Proceed Rights as a result of a Re-pricing Milestone.

Re-pricing Milestone: The following are the re-pricing milestones: (1) A proposed settlement that has a value less than the Initial Claim Valuation by at least [33%], and (2) the Judgment Milestone, if the Judgment has a value less than the Initial Claim Valuation by at least [33%].

Risk Discount Factor: The number, less than one, that one percent of the Initial Claim Value is multiplied by to set the purchase price of a Litigation Proceed Right at Closing.

Acceleration Closing Risk Discount Factor: The Risk Discount Factor used at the Closing immediately prior.

Discovery Closing Risk Discount Factor: [0.40] OR [a number to be negotiated in the [60] days prior to the Discovery Milestone]

Initial Closing Risk Discount Factor: [0.20]

Supplemental Closing Risk Discount Factor: The Risk Discount Factor used at the Closing immediately prior.

Supplemental Investment Event: A Supplemental Investment Event occurs when the balance of the Litigation Account has fallen below [$ ], all Committed Capital investments have been made, and the Litigation Counsel in good faith reasonably believes the amount remaining in the Litigation Account is insufficient to finance the conduct of the Claim through to the next Milestone Event linked to a Closing or the Conclusion of the Claim, whichever comes soonest. [Despite such certification, a Supplemental Investment Event has not occurred if the Plaintiff and Funder agree the funding shortfall is due to Attorney Waste, as defined in the retainer agreement. In such case, the related provisions in the retainer agreement shall apply.]

 

Leave a Reply

Your email address will not be published. Required fields are marked *


6 − three =

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

  • © 2014 Maya Steinitz All Rights Reserved
  • Designed By: MWD Affordable Web Designs