How the Industry is Helping Law Firms Pursue Claims Related to the Coronavirus
The adverse impact of the global COVID-19 Pandemic has been felt by most sectors of the economy, including law firms. As businesses turn to their insurance policies to help them through this unprecedented time, many are coming up short despite carrying a policy that covers business interruption losses. Insurers claim that there is no coverage for the extensive losses suffered by businesses due to the pandemic and related government shutdowns. Not surprisingly, litigation surrounding business interruption coverage has erupted across the nation.
Unfortunately, many insurance companies are adopting a scorched earth strategy, believing that lengthy litigation would ultimately benefit them as few law firms can afford to see business interruption claims through a protracted court battle. To alleviate this burden, we have developed a program to provide businesses with claims on their policies cash today. Call us today to find out whether your case qualifies.
How Litigation Financing Works
Litigation financing can turn the tables on the insurance companies and can assist law firms and their business owner clients by providing them with the capital required to litigate their claims. Financing litigation in this way often proves critical when fighting well-funded defendants, like insurance companies, and, even more so, during the current time of financial uncertainty. Funds obtained through a third-party lender can be applied to operating costs, trial costs, or for various other expenses.
Third-party litigation financing ultimately helps to level the playing field, rendering it a valuable tool in the current landscape. When unscrupulous insurance companies seek to unnecessarily draw out litigation for extended periods of time, litigation financing can help law firms representing plaintiffs stay in the fight. In many cases, nonrecourse lending may be available, meaning that the funder is only paid if the claim succeeds.
The State of Business Interruptions Claims
Law firms and their business owner clients pursuing COVID-related business interruption claims have reason to be optimistic. A decision in North State Deli, LLC, et al. v. The Cincinnati Ins. Co., et al. by the North Carolina Superior Court in Durham County, North Carolina denied an insurance company’s motion for summary judgment while granting the plaintiffs’ motion for partial summary judgment, as reported in Property Casualty 360.
In granting summary judgment, the Superior Court ruled that, as a matter of law, the insurance policies at issue covered business interruption losses incurred by the insureds due to the government’s mandated shutdown. The policies at issue do not contain a virus exclusion, but Cincinnati argued against coverage based on the policies’ requirement of “accidental physical loss or accidental physical damage.” Cincinnati argued that a “physical alteration” must have occurred at the restaurants for coverage to exist.
The North Carolina Court rejected Cincinnati’s argument based on the language of the policies, which provide coverage for “physical loss” or “physical damage.” The Court held that the insureds suffered a “physical loss” when they were unable to access and use their property, even if no physical alteration to the properties had occurred. Cincinnati’s proffered interpretation would equate the terms “physical damage” and “physical loss,” thus rendering the latter term superfluous. It is axiomatic, however, that insurance policies are to be interpreted so as to give effect to every term. Thus, to give meaning to the term “physical loss,” it must be interpreted differently than “physical damage.”
In addition to positive case law developments, the pandemic has also prompted movements towards legislation that would mandate coverage for business interruption losses stemming from the pandemic and related shutdowns.
COVID-19 brought many businesses, including law firms, to a near halt for months on end. With a second wave of the virus underway, many fear that additional shutdowns will soon follow. Many law firm owners face uncertainty in the face of another interruption in cash flow. Litigation financing can help bridge that gap.
Learn More About Litigation Financing
If you have been denied coverage related to a business interruption claim or are seeking added cash flow, we can help. At Amicus Capital Group, LLC, we have been Transforming the Business of Law™ for law firms across the country. For more than 25 years, we have helped law firms access capital when they need it most.
Contact our office at 877-926-4287 to speak directly with an experienced case manager. We offer several services to help you increase profitability, obtain a stable source of long-term financing, and provide an avenue for unparalleled growth. Whether you are looking to secure a law firm loan, assistance with case acquisition, or attorney fee deferral, we can help. Call us today to learn more about how we can help you.
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