The New York Times article, “Taking Sides in a Divorce, Chasing Profit,” features a new kind of business practice, lawsuit investment. One such practice works solely with divorce cases.
Balance Point Divorce Funding, founded by Stacy Napp in 2009, “furthers the concept of putting both spouses on an equal playing field” by lending on potentially profitable divorces in Los Angeles, California. Balance Point doesn’t exclusively invest in women, but the following prototypical divorce describes Napp’s client base: female; unemployed; mothers to small children; partners to men who own successful businesses.
This happens to be the category Napp fell into when she filed for divorce in 2001. As with many of her clients, she worked for her husband’s business, but didn’t legally own any part of it and had no money of her own. Napp paid for her divorce with loans she received from her friends and family. After a reasonable settlement, however, she learned her former husband had plans to sell a stake in an investment property worth millions. Ms. Napp asked the court to reopen her case. The resulting legal-battle lasted 8 years, but she won.
Stacy Napp recognizes that she had to win her case in order to start her investment company and to pay for her legal expenses. Balance Point, nevertheless, works entirely with clients who wish to settle; otherwise, as the article puts it, the “pursuit of justice will undermine Balance Point’s pursuit of profit.”