Legal finance in the United States was initially limited to personal injury cases, claims brought by individual litigants who had been harmed in isolated accidents or wrongdoings. These remain a large and important part of the work that litigation funders do. But when a product or incident affects a large group of people, personal injury litigation is inefficient. This is where mass tort litigation, and associated funding, comes into play.
Mass tort litigation in the United States dates back to Agent Orange, a herbicide used in the Vietnam War to kill enemy vegetation that subsequently caused cancer, heart disease, diabetes, and birth defects in veterans and their children. Commonly considered the first successful mass tort suit, the first round of Agent Orange plaintiffs—over two million veterans—sued seven chemical manufacturers in 1979.(1)(2) The plaintiffs were organized by a veteran and his wife who recognized their daughter’s birth defects as part of a larger pattern implicating Agent Orange. The initial group achieved a $180M settlement.Societal and legal developments in the 1980s allowed other mass tort victims to follow the Agent Orange blueprint. Mass media informed potential plaintiffs that their injuries were shared and connected them to attorneys willing to help. Product liability law opened pathways to legal recourse, while new aggregation procedures allowed courts to resolve claims more efficiently.
Mass tort litigation remains a powerful legal tool for plaintiffs who are injured by a similar toxin, product, catastrophe, or fraud.3 A few recent and ongoing mass tort cases include:
Transvaginal mesh: Transvaginal mesh devices were fast-tracked to the market in the mid-1990s to treat incontinence and pelvic organ prolapse. Since then, plaintiffs have filed over 100,000 lawsuits against medical device companies that allegedly hid the severe risk that the devices would break down inside women’s bodies and damage organs. Thousands of claims reached favorable settlements, with over half still pending as of March 2017.
Syngenta corn: A few years ago, corn prices plummeted, putting severe pressure on the agriculture industry. Farmers, now plaintiffs in a mass tort lawsuit, blamed Syngenta for selling them genetically modified (GMO) seeds before China—one of their largest export countries—approved the product. China’s subsequent rejection of farmers’ grain shipments allegedly amounted to $5-7B in lost profits.
NFL concussions: As research more conclusively linked head trauma to diseases including Alzheimer’s and ALS, hundreds of former football players sued the NFL for hiding its knowledge of football’s health hazards. Parties announced a preliminary settlement in 2013, but negotiations continued until December 2016. Individual payouts will vary according to injury severity, and may reach up to $5M for some players.Takata airbags: Defective airbags manufactured by Takata led to at least 11 deaths and 180 injuries in the United States, and to a massive ongoing recall. The government brought criminal fraud charges against Takata, but victims also sought to hold automakers—who allegedly knew of the defect and installed the airbags anyway—responsible. Four automakers recently agreed to a $553M settlement.
“Mass torts” are sometimes confused with a closely-related category of legal cases, “class actions.” Mass torts, though, are typically more complex because plaintiffs’ injuries vary and must be individually established in court proceedings. (In class actions, named plaintiffs establish a common injury on behalf of the whole class). Sometimes, class actions are actually a subset of mass torts, because mass tort plaintiffs with very similar injuries are grouped together. The Syngenta corn plaintiffs, for example, initially sued in hundreds of separate lawsuits, but were later grouped into several classes. This simplifies proceedings, because just a few plaintiffs can show their injuries as proxies for everyone in each class.Mass torts could, therefore, be called individualized class actions and aggregated personal injury claims. The intersection of individualization and aggregation enables tailored recoveries while achieving benefits of scale in litigation costs. However, it also poses unique difficulties. It takes a lot of time, and money, to prove each plaintiff’s injuries. Some plaintiffs may face mounting pressure to settle, even if it means compromising with defendants. Alternatively, attorneys’ funds may dry up, tempting them to settle prematurely.
Litigation funding mitigates these competing settlement pressures. Third-party funders cover plaintiffs’ injury-related costs and keep contingency-fee attorneys afloat until a truly fair settlement is reached.
Mass tort victims may amass medical bills from their injuries. Alternately (or additionally), they may be too injured to work, making basic living expenses suddenly unaffordable. Bills are due long before litigation is over. Even once parties reach a favorable settlement, years may pass before plaintiffs actually receive checks. Litigation funders offer non-recourse loans to help mass tort plaintiffs recover from their injuries and avoid bankruptcy. These loans may be provided pre-settlement (while litigation is pending) or post-settlement (while disbursements are pending). Post-settlement loans are often available for an especially low percentage stake in the settlement because defendants typically pay the promised amount.
Just as mass tort victims must front injury-related costs as they await settlement payouts, plaintiffs’ attorneys must front litigation costs. Mass tort attorneys typically operate on a contingency fee basis, meaning they receive no compensation until the lawsuit is over. Paying out of pocket subjects attorneys to massive risk, especially when litigation costs exceed initial forecasts as more plaintiffs come forward or defendants drag their feet in the settlement process.
Third-party funding lowers the risk that a case or firm will fail due specifically to mass tort litigation costs. Through non-recourse loan arrangements, plaintiffs’ attorneys receive financing in exchange for a percentage of any contingency fee award. These loans may be pre-settlement litigation loans or post-settlement attorney fee acceleration. Both forms of funding decouple cost from quality of representation, giving plaintiffs access to the most suitable attorneys regardless of the depth of those attorneys’ pockets.
Yieldstreet has and continues to invest in mass torts both pre- and post-settlement. Mass tort lawsuits are an innovative mechanism to pursue large-scale justice against defendants who have caused far-reaching harm. Mass tort litigation funding is a crucial solution by which investors give plaintiffs faster relief, keep law firms afloat, and potentially generate attractive returns.
For additional questions regarding Yieldstreet or our legal finance offerings, please email us at [email protected].
1Deborah R. Hensler, Third-Party Financing of Class Action Litigation in the United States: Will the Sky Fall?, 63 Depaul L. Rev. 1101, 1109 (2014).
2Mary Cathern Hensinger, Agent Orange and Boyle: Leading the Way in Mass Toxic Tort Actions, 6 J. Cont. Health L. & Pol’y 359, 363 & n.27 (1990).
3William P. Statsky, Mass Tort Litigation, in Torts: Personal Injury Litigation 404 (5th Ed. 2010).
Sign up with your email address
Securely verify your identity and link a bank account
Verify your accreditation (if applicable) to access all of Yieldstreet’s offerings.
Our weekly podcast providing ideas about how to make money work for you and bring you closer to your dreams.
1 Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in significant losses.
2 Represents a net estimated, unrealized annualized internal rate of return (IRR) of your portfolio and is based by reference to the effective distribution dates and amounts to and from the investments, as well as any outstanding principal and accrued and unpaid interest as of the current date, after deduction of management fees and all other expenses charged to the investments.[read more]
3 "Annual interest" or "Annualized Return" represents an annual target rate of interest or annualized target return and "term" represents the estimated term of the investment. Such target interest or target returns and estimated term are projections of the interest or returns and or term and may ultimately not be achieved. Actual interest or returns and term may be materially different from such projections. This targeted interest or returns and estimated term are based on the underlying investments held by the applicable.
4 Reflects the initial quarterly distribution declared by the board of directors on February 6, 2020, which will be payable to stockholders of record as of June 10, 2020, and the initial offering price of $10 per share.
5 The Fund will cease investing and seek to liquidate the Fund's remaining portfolio no later than 48 months after the Fund's initial closing. It may take up to twelve months thereafter to fully monetize any remaining illiquid investments in the Fund's portfolio.
6 Represents the sum of the interest accrued in the statement period plus the interest paid in the statement period.
7 The internal rate of return ("IRR") represents an average net realized IRR with respect to all matured investments weighted by the investment size of each individual investment, made by private investment vehicles managed by YieldStreet Management, LLC from July 1, 2015 through and including Sept 6th, 2021, after deduction of management fees and all other expenses charged to investments.
8 Investors should carefully consider the investment objectives, risks, charges and expenses of the Yieldstreet Prism Fund before investing. The prospectus for the Yieldstreet Prism Fund contains this and other information about the Fund and can be obtained by emailing [email protected] or by referring to www.yieldstreetprismfund.com. The prospectus should be read carefully before investing in the Fund. Investments in the Fund are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency) and are not guaranteed by Yieldstreet or any other party.
No communication by YieldStreet Inc. or any of its affiliates (collectively, “Yieldstreet™”), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice. Nothing on this website is intended as an offer to extend credit, an offer to purchase or sell securities or a solicitation of any securities transaction.
Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors’ portfolios. Any investment information contained herein has been secured from sources that Yieldstreet believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefor.
Private placement investments are NOT bank deposits (and thus NOT insured by the FDIC or by any other federal governmental agency), are NOT guaranteed by Yieldstreet or any other party, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.
Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Additionally, investors may receive illiquid and/or restricted securities that may be subject to holding period requirements and/or liquidity concerns. Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest.
Alternative investments should only be part of your overall investment portfolio. Further, the alternative investment portion of your portfolio should include a balanced portfolio of different alternative investments.
Articles or information from third-party media outside of this domain may discuss Yieldstreet or relate to information contained herein, but Yieldstreet does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party articles, do not constitute an approval or endorsement by Yieldstreet of the linked or reproduced content.
Investing in securities (the "Securities") listed on Yieldstreet™ pose risks, including but not limited to credit risk, interest rate risk, and the risk of losing some or all of the money you invest. Before investing you should: (1) conduct your own investigation and analysis; (2) carefully consider the investment and all related charges, expenses, uncertainties and risks, including all uncertainties and risks described in offering materials; and (3) consult with your own investment, tax, financial and legal advisors. Such Securities are only suitable for accredited investors who understand and willing and able to accept the high risks associated with private investments.
Investing in private placements requires long-term commitments, the ability to afford to lose the entire investment, and low liquidity needs. This website provides preliminary and general information about the Securities and is intended for initial reference purposes only. It does not summarize or compile all the applicable information. This website does not constitute an offer to sell or buy any securities. No offer or sale of any Securities will occur without the delivery of confidential offering materials and related documents. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials. Yieldstreet™ is not registered as a broker-dealer. Yieldstreet™ does not make any representation or warranty to any prospective investor regarding the legality of an investment in any Yieldstreet Securities.
Banking services are provided by Evolve Bank & Trust, Member FDIC.
Investment advisory services are provided by YieldStreet Management, LLC, an investment advisor registered with the Securities and Exchange Commission.
Our site uses a third party service to match browser cookies to your mailing address. We then use another company to send special offers through the mail on our behalf. Our company never receives or stores any of this information and our third parties do not provide or sell this information to any other company or service.