Houston Litigation Funder Sues Personal Injury Lawyer for $5.7 Million Over Failure to Repay Loan
Virage Master, a Houston litigation funder, is seeking $5.74 million from Sulphur Springs, TX personal injury lawyer, Gregg Price. Virage Master filed a lawsuit in October alleging that Price has failed to pay back any amount towards a 2015 loan.
For those who aren’t familiar with the concept, litigation funding is the practice where an outside third party — unrelated to the actual lawsuit — provides capital to a plaintiff involved in litigation in return for a portion of any financial settlement recovered from the lawsuit. In essence, the idea is for an outside individual or company to fund plaintiffs and law firms in cases where a victorious judgment can be anticipated.
Litigation funding startups are becoming commonplace and, as an article in TechCrunch indicated, “When everything goes the right way, the capital that helps fund the lawsuit is returned — and then some — in return for the risk taken. Litigation finance firms — and there’s a growing number of them — basically want to estimate as accurately as possible the risk involved so they can bet on the right horses.”
Though this type of financing has existed for over 20 years, it is increasingly becoming a mainstream funding solution that helps equalize access to the legal system. Fortune 500 companies, major universities, and businesses of all sizes are said to have benefited from commercial litigation funding. The capital that is effectively a loan can directly pay for some of the costs of litigation, including attorneys’ fees, expert witness fees, and court expenses. Common examples of litigation funding can include supplying working capital for companies involved in litigation or assisting business owners in paying for personal expenses.
In the example of Virage Master and Gregg Price, a victorious settlement was reached in the case for which the loan was issued, meaning Price’s client received a financial award. However, despite the terms setup and agreed upon before the loan was issued, Virage Master claims that Price has yet to pay back a penny of the loan, or the fee that Virage Master is entitled to given that the settlement was in favor of Price’s client.
In a petition filed in October in Texas district court in Harris County, Virage Master alleged that it loaned $3,250,647 to Price on July 21, 2015, for business expenses. Virage Master claims that, although Price agreed to provide quarterly case status updates, he has not done so since October 2018 despite “repeated requests.”
Additionally, the petition contends that Price and his firm have settled lawsuits that comprise a part of the collateral for the loan, and they are required to pay Virage Master 50% of their interest in the settlement proceeds.
“Defendants have failed, however, to comply with the terms of the note because they have either retained the entirety of the settlement proceeds and/or failed to transmit up to 50%,” according to the petition, which also indicated that Price and his firm have “utterly refused to comport with their obligations.”
Virage Master insists that the entire amount of the loan is outstanding which, with compounded interest of $1,914.76 daily, brings the total amount due to $5,742,448.
Virage Master’s filing brings a breach of contract cause of action against Price and his firm, and seeks a declaratory judgment that it [Virage Master] is entitled to a declaration of its rights in connection with the loan and is additionally entitled to attorneys’ fees.
PINews attempted to reach a Virage Master representative, but was told that they are out of the office for the Thanksgiving holiday. Attorney Gregg Price did not immediately respond to a request for comment.
In August, a judge in Harris County signed a final summary judgment awarding Virage Master $2.4 million against a Missouri law firm that allegedly failed to make any payments on a $1.4 million loan.