This episode of the Personal Injury Marketing Minute highlights a critical issue faced by personal injury clients: managing immediate financial burdens while awaiting settlement payouts. Traditional funding options, such as personal loans and settlement advancement loans, often prove inaccessible or predatory, adding stress to an already difficult situation. In response to this challenge, the Milestone Foundation has emerged as a nonprofit alternative, providing pre-settlement funding that aims to protect clients from exploitative practices.

Rachel McCarthy from the Milestone Foundation joins us to share the organization’s innovative model and its mission to address the financial inequities within the legal system. She explains the foundation's non-recourse settlement advancement model, which sets it apart from traditional funding methods, and its low, simple interest structure designed to offer clients a fair and transparent solution during their time of need.

Visit The Milestone Foundation online here: https://themilestonefoundation.org/.

See all episodes or subscribe to the Personal Injury Marketing Minute here: https://optimizemyfirm.com/podcasts/.

https://youtu.be/kpS4dNg3XfY

Transcript:

Welcome to the personal injury marketing minute, where we quickly cover the hot topics in the legal marketing world.

One of the biggest challenges that clients face after a personal injury accident is how do I pay the bills that I have right now with a good personal injury lawyer?

They know the settlement is coming and it will cover things on the backend, but what about today? There are options for personal loans, but it can be tough to qualify.

Then there are settlement advancement loans, but those can be insanely predatory and will eat away a client settlement. Fortunately, a nonprofit settlement funding foundation is now providing an alternative for settlement advancement.

Rachel McCarthy: from the milestone foundation joins us today to discuss the foundation's groundbreaking mission, the inspiration behind its creation.

and the critical need for a non-profit alternative to traditional funding methods. Thank you so much for joining us today, Rachel.

 

Rachel McCarthy:

Thanks, Lindsey. I'm happy to be here.

 

Lindsey:

Well, could you give us a brief overview of the Milestone Foundation and its mission?

 

Rachel McCarthy:

Absolutely. So the Milestone Foundation is a 501c3 non-profit organization, and we exist to help plaintiffs who are having trouble covering their basic living expenses while they are pursuing justice.

So most of the families and individuals, we provide financial assistance to help them cover basic living expenses like housing or vehicle or utilities, groceries, while they are going through the duration of their personal injury lawsuit.

 

Lindsey:

Well, what inspired the creation of the Milestone Foundation as a non-profit pre-settlement funding option?

 

Rachel McCarthy:

So our founder, John Baer, was a settlement planner, and he... He would work with families who were going to be receiving a settlement, figuring out the financial plan for these folks once they have their settlement funds.

And he kept noticing that plaintiffs would owe a huge, a significant portion of their settlement to these for-profit lending companies.

And he thought there has to be an alternative for these folks, and there wasn't. There was no alternative. So his wife, Amy, and him decided to start a non-profit model that would do pre-settlement funding, so advancing a small amount of funding on the settlement, and do it as a non-profit.

So not looking to make money, but just looking to help people bridge the gap and then grow the work that we do as much as we can.

 

Lindsey:

And that is huge. mean, A, to acknowledge that need, and then to do something about it, that speaks volumes about- about where they are in terms of wanting to actually help their clients.

As opposed to just profit from working the cases. And that is incredibly admirable. And I mean, there are other options out there, but they can be predatory or they can be difficult to qualify for.

And it leaves a bulk of the clients who are just trying to get by in a really bad financial situation on top of being in a difficult physical situation as a result of their injury.

 

Rachel McCarthy:

Yeah, we always say it's like insult to injury, really, truly, because, you know, most people these days are living paycheck to paycheck or you might not have a substantial savings.

And if something happens to you, like some kind of catastrophic accident or a car accident or, you know, a medical device accident, injury, you don't have a pool of savings or you don't have a support system that can get you through.

You know, litigation can take years or even even if it's just for. Six months, you still have to pay your bills.

You still have to pay your rent or your mortgage. And where is that going to come from? It's like you might know that you're going to be getting $1 million, $2 million, $500,000 down the line, but that doesn't help you today.

And so that's where these people get really stuck.

 

Lindsey:

And so this model is just so different from everything else that's out there. So walk me through how this advancement model works and how it is different from the other funding models that are out there.

 

Rachel McCarthy:

Sure. So the Milestone Foundation provides settlements, advances on settlements at 10% simple interest. So what that means is simple interest is calculated only on the principal amount that you're advanced.

If you take out a $10,000 advance from us and it takes you a year to pay it back, the interest that would accrue is just 10% simple interest.

So it's $1,000. A lot of the for-profit companies in the industry... They charge much higher interest than that, and also they do so in a way that compounds.

So the difference with compounding interest is that it's calculated on the principal plus any interest already earned. So it could compound monthly, it could compound quarterly, biannually.

Everyone has a different model. And when you take that into consideration and the interest rates that they're doing that at, we've seen people owing an interest of 49% at the end of the year on what they've been advanced.

It's really egregious. And the reason why it can be that way is because the industry is really not regulated.

It's not federally regulated. Certain states are more specific with rules or restrictions or guidelines around this. But for the most part, the type of lending is called non-recourse.

So that means that if you don't recover, if you don't, in these cases, if you don't receive a settlement, if your case doesn't, you know, you don't win.

Or maybe you received a settlement, but it's much smaller than what you were advanced, then you don't have to pay it back.

So if we fund a plaintiff who is struggling to make ends meet and their attorney feel like it's a great case and in the end something happens and it doesn't work out, we're out that money.

And so the fact that it's that high risk, it justifies the for-profit lenders to charge such high interest because they need to cover that.

And so that's one of the things that's great about us, but also tricky is because we don't charge those high interest rates because we're not trying to turn a profit.

But then if we end up giving out a lot of money and we don't get it back since we're a non-profit, it just limits how much more we can give out.

 

Lindsey:

Right. And I'm sure that as a non-profit, you're looking for other ways to offset that risk. Looking for grants and other ways that support, financially support your foundation.

And since it is risky, are there any limits on how much an applicant can borrow or what expenses the loan can be used for?

 

Rachel McCarthy:

Yes. So the Milestone Foundation is a little more strict in what we will fund, given what I said, that we don't have, we don't charge a lot of interest.

We don't have a big cushion. So we are more reserved in what we will fund. We do not typically fund more than $25,000.

And I would say our sweet spot is around $6,000 is the average advance that we give. It's really just intended to be a bridge, a bridge gap to help them get to their settlement.

And we encourage people to not take much more than they need, you know, and that's another thing that makes us different than the other companies.

They may say, yeah, take whatever, take, you know, take $100,000 to them. It doesn't, it does no skin off their back.

Because they're just growing interest on that. And so the more you take, the more they'll make. So we really work with families and plaintiffs to try to figure out what they think they need.

And we will only provide for basic living expenses. So housing, transportation, child care, support, groceries, utility bills, those things.

 

Lindsey:

And that makes a lot of sense. Because no, you don't want to be bridging the gap and then having somebody go out and get like a new handbag that's, you know, $3,000.

Right. Exactly. So that's really not what it's used for.

 

Rachel McCarthy:

Yeah.

 

Lindsey:

And so with this, you know, what other preventative measures do you put in place to make sure that your borrowers are actually going to win their case?

How do you protect yourselves with that?

 

Rachel McCarthy:

I mean, there's not much we can do. know, part of consumer litigation funding is you're not taking an interest in the case or you don't have any say or influence over how the case pans out.

So really, we rely heavily on our network of trial lawyers to send us plaintiffs in cases that they feel are pretty strong.

And so we sort of think of that as our first level of vetting, I guess,