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pyg9s
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September 11, 2018, 01:54:51 AM
 #1

Hi. My first post here. I hope it's the right place to post it Smiley

Idea: I'm currently preparing for an upcoming lawsut against my client and can't stop thinking about possibility of making it public and help public benefit from it through tokenizing it. It is not an advertising of any sort so I won't share any details, more of an interesting experiment that came up to my mind due to the position I'm currently in. So I'd like to know your opinions. Would this work?

Theoretical plan: Our company issues 10k tokens worth lets say 1 dollar each to cover the cost. In return big part of possible wins will be shared among investors.

Pros of tokenized lawsuit:

- lower cost for the company that sues
- low risk for investors in case lawsuit is lost (minimum investment would be 1 dollar)
- easy money in case lawsuit generates payout
- being part of an interesting experiment
- easier participation in class lawsuits

Cons of tokenized lawsuit:

- lower wins for the company that sues


Would that work? Would you potentially participate in a project like this?

Of course in a project like this everything must be done legally and clearly for everyone, with supervision of a lawyer, publicly and on open blockchain (no shady coins).
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September 12, 2018, 03:26:20 PM
 #2

LOL, that's an interesting idea. I don't quite see why would you need tokens/cryptocurrency for that. It's probably easier just to start "crowdfund my lawsuit" platform, similar to existing crowdfunding sites and accept fiat (+ maybe crypto, in addition).

The main difficulties I see:
- you would be subject to stricter requirements as, almost certainly, it would be treated as investment platform (you're putting money in, hoping for profit)
- the investors can't make a fair judgement when they're only presented with biased, one-sided version of the story presented by the plaintiff, who would have incentive to omit uncomfortable facts etc.
- when you win, defendant will have to bear your legal costs (investors get paid back), but how do you make a profit for them?


Don't be surprised if someone steals your idea and runs it as an ICO.

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September 12, 2018, 07:22:08 PM
 #3

There I see some issues I have with startups and developers. Ideally, everything can be tokenized but not everything should be tokenized. You have an amazing idea but I think creating a tokenized platform has no need here.
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September 17, 2018, 04:25:34 AM
 #4

LOL, that's an interesting idea. I don't quite see why would you need tokens/cryptocurrency for that. It's probably easier just to start "crowdfund my lawsuit" platform, similar to existing crowdfunding sites and accept fiat (+ maybe crypto, in addition).

Perhaps easier but you accept the middle man (the crowdfunding website) that will define the rules and take the cut. With crypto there's no middle men and payouts are faster.

Quote
- when you win, defendant will have to bear your legal costs (investors get paid back), but how do you make a profit for them?
We would agree that investors get half the winnings for example, in this case half the legal costs back Smiley
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September 17, 2018, 05:31:45 AM
 #5

You have got some interesting idea up there but its looks too simple for it to go that straightforward and bring out reward because that would mean every scam tokens out there with some operating in the jurisdiction that can be sued to court would have been made to account for their actions and payback whatever they must have falsely enriched themselves with some period of jail time in form of consolation.

However, the part of the legal cost is what sounds confusing, up there, it was $1. But how would $1 be enough to file the court papers, hire attorneys, do investigations, print briefs and other incidental costs to be incurred in the pursuance of a case in court. That part looks impracticable. Another concern here is the jurisdiction where the people are to be held responsible are based and not all places have developed legal system that would fit into this model. How would they be held liable for their own actions or they are exempted at the moment?

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September 17, 2018, 10:08:40 AM
 #6

LOL, that's an interesting idea. I don't quite see why would you need tokens/cryptocurrency for that. It's probably easier just to start "crowdfund my lawsuit" platform, similar to existing crowdfunding sites and accept fiat (+ maybe crypto, in addition).

Perhaps easier but you accept the middle man (the crowdfunding website) that will define the rules and take the cut. With crypto there's no middle men and payouts are faster.

I understood your idea was for crowdfunding lawsuits in general and not only to fund yours. In such scenario you'd be creating crowdfunding website and deciding on your cut.
Creating token just to fund one lawsuit makes no sense - the time/energy/cost spent organising such project (properly) would likely be greater than for the lawsuit itself.

Quote
- when you win, defendant will have to bear your legal costs (investors get paid back), but how do you make a profit for them?
We would agree that investors get half the winnings for example, in this case half the legal costs back Smiley

So if all goes well investor only gets half of his investment back? I'll pass.

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September 17, 2018, 06:40:03 PM
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However, the part of the legal cost is what sounds confusing, up there, it was $1. But how would $1 be enough to file the court papers, hire attorneys, do investigations, print briefs and other incidental costs to be incurred in the pursuance of a case in court.
Total cost is $10,000, so there would be 10000 tokens issued for 1 dollar each. How many buyer wants to get is entirely up to him/her.

Quote
Another concern here is the jurisdiction where the people are to be held responsible are based and not all places have developed legal system that would fit into this model. How would they be held liable for their own actions or they are exempted at the moment?
Everything would take place in Europe.

Creating token just to fund one lawsuit makes no sense - the time/energy/cost spent organising such project (properly) would likely be greater than for the lawsuit itself.
I think it would be actually easier. Token would be put on the exchange with SELL order, then depending on the court verdict it would be BUY for the price depending on how much is settled.

Quote
So if all goes well investor only gets half of his investment back? I'll pass.
In this case half of the cost + half of the winnings.

Imagine this scenario: You got 1000 tokens worth $1000 so 10% of the stake.

Next day we win in court, lets say 50,000 USD.
Then I create BUY order with the total budget of 30,000 USD (half the winnings (25K) + half of the costs returned (5K). That's $3 per token. You get $3000 back.
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September 18, 2018, 10:58:31 AM
 #8

Total cost is $10,000, so there would be 10000 tokens issued for 1 dollar each. How many buyer wants to get is entirely up to him/her.

You cannot possibly know the total cost beforehand. You can only operate with estimates. There's always a risk it will exceed 10k and you'll run out of funds.

Creating token just to fund one lawsuit makes no sense - the time/energy/cost spent organising such project (properly) would likely be greater than for the lawsuit itself.
I think it would be actually easier. Token would be put on the exchange with SELL order, then depending on the court verdict it would be BUY for the price depending on how much is settled.

Sure, it's easy if you ignore all the legal requirements related to offering investment opportunity to the public, KYC/AML/Data protection, hustle of drafting agreement, whitepaper, data processing, all the technical aspects of creating new, single use tokens etc.

In this case half of the cost + half of the winnings.

Imagine this scenario: You got 1000 tokens worth $1000 so 10% of the stake.

Next day we win in court, lets say 50,000 USD.
Then I create BUY order with the total budget of 30,000 USD (half the winnings (25K) + half of the costs returned (5K). That's $3 per token. You get $3000 back.

Assuming you got all the $10k from token sale - why would you keep half of the costs returned?

I think you're confusing court with lottery. There are no "winnings" - when you win, you get your costs back + compensation for the loss you incurred by a defendants fault. ie.
- you provide a service to the client worth $5k
- he refuses to pay
- you take him to court
- court orders him to pay that $5k back + cover legal expenses.

If you want to share half of that $5k with 'investors' - then you're $2.5k down.

So it boils down to: if your chances of winning are high: pay the costs yourself, borrow from friends/family, or even take a bank loan (way cheaper than token).
If your chances look slim - let it go. No one will back you anyway.

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September 20, 2018, 03:15:49 AM
 #9

You cannot possibly know the total cost beforehand. You can only operate with estimates. There's always a risk it will exceed 10k and you'll run out of funds.
I'd rather keep it simple. If more tokens are issued then previous investors will have to share profits with more people.

Assuming you got all the $10k from token sale - why would you keep half of the costs returned?
To keep it simple. Company has to use money to cover a lot of other things such as taxes, payments to other contractors involved, etc. To make it simple it's half for investors half for the company. Without breaking it into this and that, issuing more tokens etc. Just a simple rule.

Quote
If you want to share half of that $5k with 'investors' - then you're $2.5k down.
Yes that is correct, this is the part of investment risk, however if the case is won there's no way to lose money.

Quote
So it boils down to: if your chances of winning are high: pay the costs yourself, borrow from friends/family, or even take a bank loan (way cheaper than token).
If your chances look slim - let it go. No one will back you anyway.
It's not about having no money. I have money to pay for it many times over. It's about an experiment of tokenizing a lawsuit, something that has never been done before. An experiment everyone can participate in for as little as $1.
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September 20, 2018, 11:42:43 AM
 #10

Yeah, curious idea at the very least but this should be a fine example of how tokenization and crowdfunding could literally work for any idea, but practically doesn't make sense. Lawyers don't take on clients they don't feel they can win (unless they're salaried, in which case it doesn't matter if you win or lose), and those who know they can win a big settlement won't want to share that settlement - besides the fact that it could actually be illegal to do so.

Throw in securities to a legal battle, why don't you? My bet's on most judges in most courts just throwing these cases out for frivolous waste of public funds.

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September 20, 2018, 03:03:19 PM
 #11

In the case I'm referring to, lawyers agreed to work on commission basis. Their commission is 10%.
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September 20, 2018, 03:32:19 PM
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Is this even legal? Taking profits from the rewards of damages in a lawsuit? As far as I know the damages is only for the suing party only and it cannot be shared to people. Also as a legal firm if you are one the fees given to you is only a partial amount of the damages if not the judge will also order a separate payment which will also be paid by the losing party. Lawsuits are not meant for investing and the ones who will participate your tokens are the ones will most likely risk big as there is no guarantee that you will win.

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September 22, 2018, 01:24:17 AM
 #13

Totally legal. Money is the property of the winning party and they can do anything they wants to with it. Even give it away if they want.

Tokenized lawsuit would also make a lot of class lawsuits possible.
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September 22, 2018, 09:00:16 AM
 #14

Assuming you got all the $10k from token sale - why would you keep half of the costs returned?
To keep it simple. Company has to use money to cover a lot of other things such as taxes, payments to other contractors involved, etc. To make it simple it's half for investors half for the company. Without breaking it into this and that, issuing more tokens etc. Just a simple rule.

Keeping it simple would be: investors pay for your lawsuit - investors get their money back if you win + some share of your "winnings".
In your proposed model, there's still a risk they will lose money even if case is won (as you can 'win' but get less "winnings" than you asked for).


Quote
If you want to share half of that $5k with 'investors' - then you're $2.5k down.
Yes that is correct, this is the part of investment risk, however if the case is won there's no way to lose money.

You didn't understand. You lose money if you win. As the 'winnings' are actually a 'compensation' for you. Simple hypothetical example (lets ignore legal costs to keep it simple):
- You sell a bike to a guy for $400 and agree he would pay you next week.
- He don't pay you (also bike got destroyed/stolen/sold etc)
- You take him to court and you win. Court orders him to pay you $400
- You share 50% of that "winnings" with investors.
- You have $200 left.

Summary: You had a bike worth $400, now you only have $200. That's a $200 loss.

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