Worker Sues Over Litigation Funding He Claims He Didn’t Agree To

A personal injury plaintiff sued a lawyer and a consumer legal funder alleging that he is paying for litigation financial backing that he did not agree to.

Sean Murtaugh, who claims he was injured in a workplace accident in 2018, received backing from Jordan Litigation Funding while his case against his employer was in litigation. But when he settled that case for $475,000, he said he was billed by his lawyer, Robert Goggin, for interest on separate funding Goggin had received from Jordan to cover the costs of experts, Murtaugh’s medical bills, and depositions.

“Mr. Murtaugh had no idea that Mr. Goggin had received litigation funding to cover case costs, and Mr. Murtaugh never agreed to pay interest on any of those case costs,” according to his complaint filed in federal district court Wednesday.

The attorney for Murtaugh declined to comment. Goggin and Jordan Litigation Funding did not immediately respond to requests for comment.

Murtaugh said he received an itemization of costs showing Goggin borrowed more than $81,000 to pay for legal costs that accrued interest daily, making the total nearly $137,000.

Though Murtaugh did receive six months of funding from Jordan to pay for personal expenses while he was out of work, his complaint alleges he did not agree to receive funding to pay for his lawsuit.

Consumer vs. Litigation Funding

Consumer legal funding involves providing funds to plaintiffs in personal injury cases for personal expenses while their claim is pending. The payment comes out of any award or settlement.

It is different from litigation finance, in which investors provide a large sum of money to law firms or claimants to pay for the costs of litigation in return for a chance to recoup a portion of the award.

Though the two industries are often conflated, consumer legal funding often involves thousands of dollars, while litigation financing contracts are usually in the millions.

When litigation funding is used to finance the costs of a case, payment typically comes out of the contingency fee given to the lawyer as opposed to the portion for the plaintiff.

Regulation for consumer legal funding has passed in several states, including Maine, Oklahoma and Vermont. The law bars consumer legal funding from being used for litigation costs. There is no such law in Pennsylvania where the Murtaugh case has been filed.

“This is a good example why proper regulation on the industry is needed,” said Eric Schuller, president of the Alliance for Responsible Consumer Legal Funding, a trade association for the industry. Rules can “ensure that both consumers and attorneys are fully understanding as to what their roles are and what the funds can be used for,” Schuller said.

The case is Sean Murtaugh v. Robert S. Goggin, III, Esquire, E.D. Pa., 24-00026, 1/3/24