Andrew T. Savage is a nontraditional lawyer working in litigation finance — a relatively new and often controversial field in which litigants with financial need are provided assistance. Though some critics call it a form of "loan sharking," Savage says they simply "haven`t spent enough time understanding it." The Salem-based lawyer says he broke into the business in response to the unfair playing field caused by the "scorched-earth" tactics of defense lawyers who try to determine how long a plaintiff is able to financially sustain a lawsuit. Now, in just under three years, Savage has grown his company to one of the largest and most successful in the country, with a large amount of his practice in Rhode Island, Massachusetts and New Hampshire.

Born: Nov. 13, 1969; Portland, Maine

Education: Boston College Law School, 1995; Bowdoin College, 1992

Bar admission: 1995, Massachusetts

Professional experience: LawFunds (1999-present); A.T. Savage Group (1998-present); Lyne, Woodworth & Evarts (1995-1998)

Professional affiliations: Association of Trial Lawyers of America; American, Massachusetts and Essex County bar associations; Association of Legal Administrators

Outside interests: Competitive sailing, family

* * *

Q. Explain non-recourse funding — or litigation finance?

A. What we do is purchase partial assignments of proceeds from pending lawsuits. An applicant comes to us looking for a cash advance and we underwrite their case, primarily looking at the public information in the pleadings [and] discovery and evaluate whether it is sufficient collateral for a transaction. If it is, we will purchase a discounted interest in the potential proceeds from that case.

Q. Why is it such a recent phenomenon?

A. In Massachusetts, the [Supreme Judicial Court] had a 1997 decision that abolished champerty and maintenance, and it opened up Massachusetts as a market for this type of transaction. Recently a lot of other states have followed suit so it is a relatively new trend. Champerty and maintenance laws existed in most states for a long period of time, and it`s only in the last decade-and-a-half that it`s garnered attention and gotten a good look. Also, for traditional lending institutions, this isn`t the type of collateral that they were willing to look at. But the strong financial markets over the last seven or eight years have helped create some liquidity that has allowed investors to start looking at this service.

Q. What type of clients do you handle?

A. We market directly to law firms, and most of our market is really educational — trying to explain what this process is and who is right for it. That way, when an applicant comes to us they`ve already talked to their attorney about it and hopefully they have some understanding of what the transaction is about. We don`t look at cases before they`ve been filed. Ideally, the further they are along in the process the easier it is for us to underwrite the risk, but it really runs across the spectrum. Most of our transactions address the client`s non-litigation needs. What we do is provide money for living expenses, cover a mortgage, rent or car payment, or back debts, so it really depends on where the client is in their overall financial situation.

Q. What type of cases do you see typically?

A. We see cases [that run] the gamut. Our clients range from individuals in small auto accidents to a large public corporation, and also claims relating to torts to appellate actions. On the consumer end, we see a lot of significant-injury auto accidents where the client has been unable to work, earn a living or is just hard pressed as a result of it. We also see a lot of maritime work.

Q. What`s a typical return for your company?

A. It ranges depending on the cases and the risk associated with it. We don`t charge interest. We charge flat fees. It can range anywhere from 25 percent of principal to 200 percent of principal, depending on the case. It really is case specific.

Q. How do you get funding to make these loans?

A. We`re a privately held company so all of our money comes through the company itself. There are some competitors that have investors in it, but we haven`t gone that route. We feel it`s still too new a product for people to fully understand, and to be comfortable offering people investment opportunities.

Q. Do you get paid even if your client doesn`t win?

A. No. Because of the way the transactions work, and that`s the non-recourse portion of it, we`re purchasing on assignment as opposed to being a lender. We have rights only if those proceeds materialize, so if a case is unsuccessful, there is no repayment obligation. There are additional risk factors for us; it`s not only if the cases wins or loses. We take a secondary position behind the attorneys` fees and costs as well as any statutory medical liens, and that`s all handled in our contract. We have the risk if the case is successful, but if it`s a small recovery, we`re down on the food chain.

Q. What are some of the other risks?

A. There`s the risk that the client decides to declare bankruptcy. Our interest comes from the funds coming in the attorney trust account and the client having instructed the attorney to disperse the funds to us as he would with any other lien. There have been cases where the finds get dispersed and the client disappears. Most of the risks are the traditional litigation risks. They`re the same risks that plaintiffs` attorneys take when they take a contingent case. You don`t know how many intangibles are going to come up to throw the case into a tailspin or strengthen it.

Q. What do you say to critics who consider this industry a form of loan sharking?

A. I think they haven`t spent enough time understanding it. One of the really unique things about what we do is that the attorney acts as a gatekeeper. Certainly, in any industry there are bad seeds — people looking to get rich quick — but that`s not what we`re about. When we look at a case, we say: "Can our financial systems help this client maximize the recovery in their case?" We`re here for the type of client who has a settlement offer on the table or is about to get a settlement offer that is absurdly low, but is going to lose their house next month. [The clients] don`t want to take this offer, but they need this help. So we look for cases where, ultimately, even after we`re paid, the cost of what we do is absorbed in the greater net recovery of the client. It is entirely contingent so it isn`t a loan. It is expensive, there`s no question about that, and we make that very clear to the client. This is funding of last resort because it is so expensive. But it`s associated with the risk. It`s the same risk and reward that contingency fees are based on.