CrowdJustice and the phenomenon of legal crowdfunding
Julia Salasky explains how CrowdJustice, the UK’s first crowdfunding platform for public interest litigation, and the practice of crowdfunding work.
About the author
Julia Salasky is CEO and founder of CrowdJustice.
The technology industry boasts an ever-growing ecosystem of entrepreneurs figuring out new ways to use tech to do things differently, better, faster or with more information. The buzzword is ‘disruption’.
Crowdfunding – or the practice of funding a project or venture by raising many small amounts of funds – is the people’s form of disruption. In industries as diverse as art and technology projects to investments in startup businesses it has, over the past five years or so, provided a robust new source of capital to everyone from entrepreneurs to would-be philanthropists. At the same time, crowdfunding provides an opportunity for individuals from all walks of life to participate in projects to which, in the past, they might have never had access.
In so doing, crowdfunding has disrupted traditional models of big capital: so much so that, in 2015, Forbes magazine reported that ‘by 2016 the crowdfunding industry is on track to account for more funding than venture capital, according to a recent report by Massolution’.
Crowdfunding for the law
Although, until recently, crowdfunding had not been applied to the law, a model that pools the resources of many in order to achieve a specific outcome is nowhere better suited than for legal cases. And its democratising, disruptive aspect - of giving individuals or groups access to funds to be able to take legal cases and communities the power to have a voice in legal issues that affect them - is needed more than ever.
Enter CrowdJustice, a new type of crowdfunding platform that accommodates the regulatory and compliance issues of funding legal cases, while bridging the funding gap which can make accessing the law impossible for all but the very rich. The premise behind the platform is that individuals care about their communities, understand the power of the law to help create social or legal change, and will put their energy and support into legal cases to try to achieve concrete outcomes.
Types of cases
This is not an abstract principle. In the first year after the launch of CrowdJustice, claimants raising funds for cases on the crowdfunding platform obtained over £1m and inspired tens of thousands of people to give and (sometimes more importantly) to show support for the difficult - or publicly important - circumstances that have triggered legal action.
Judicial reviews have featured prominently, though employment cases, inquests and inquiries, planning applications and human rights claims, among others, have raised funds and awareness about the issues at stake. Claimants have ranged from a victim of sexual harassment (raising funds under a pseudonym) to a group of junior doctors running a grassroots case to challenge contracts imposed by the government on working hours.
And those who have used the site tend to see benefits beyond the funds themselves. Matthew Jury, managing partner of McCue & Partners, in London, whose clients used the platform to raise fees for an investigation into the lawfulness of state officials’ actions in the second Iraq war, said: ‘For our clients, crowdfunding was not just a powerful tool but an essential one. Without it, they would have had no means of
raising the funds they needed. Just as importantly, as well as raising the profile of the issues, the outpouring of support from friends, family and the public gave them confidence, comfort and steeled their resolve. It’s not an exaggeration to say that, as well as the funds, crowdfunding gave our clients the energy they needed to carry on what has been a long and difficult fight for justice.’
Hannah Fordham was one of the claimants behind a High Court challenge to Labour party voting rules, which banned anyone who joined as a member after 12 January 2016 from taking part in the leadership election between Jeremy Corbyn and Owen Smith unless they paid an extra £25.
Hannah Fordham told us: ‘Without crowdfunding, I and the others named in our case wouldn't have been able to hire brilliant lawyers, and consequently mount a successful challenge to a policy that we saw as unlawful, unfair and undemocratic. We were able to give those who were disenfranchised a real voice for change!’
Hannah Fordham and the four other claimants taking that case won in the High Court, but then lost their case on appeal. In the meantime, thousands of people had participated in helping the issue reach the justice system.
Regulatory issues
Crowdfunding is a new area for the legal profession, and issues naturally arise around the provision of a safe environment for giving to legal cases. Donation-based crowdfunding (unlike equity-based crowdfunding) is not regulated by the Financial Conduct Authority. However, one of the key differentiators between CrowdJustice and other crowdfunding platforms is its attention to legal regulations and compliance issues. It is the only platform that has lawyer client money rules built into its fabric.
Funds raised for a case on CrowdJustice go directly to the lawyer’s client account to give funders comfort that the person fundraising has a real case, but also so that the claimant is not responsible for opening a new bank account or ensuring that funds raised for litigation are segregated from normal expenditures.
Given lawyer-client account rules, CrowdJustice carries out sanctions and politically exposed persons checks on all funders, and performs know your customer checks on the person raising funds, who must also be the same person who has instructed the lawyer. The fact that a claimant must have instructed a lawyer has another benefit too: it means that there is a high standard of cases on the site.
What kind of costs can be funded?
Claimants on CrowdJustice have raised donations for everything from legal fees to disbursements and court fees, and potential adverse costs exposure, and are starting to consider funding for after-the-event insurance premiums. What crowdfunding does not do is change a client’s relationship with their lawyer or with the courts. The client remains responsible for all costs associated with the case, and often crowdfunding may be just one funding stream among others.
What is next?
The future of law and technology is much talked about, but it is clear that crowdfunding is one way to enable people to come together to understand and participate in the law, to hold the government to account through the law, and to allow many Davids to have the power of a Goliath. And what is more disruptive than that?
We are not a political platform, but we are certainly launching in an American political climate that is deeply polarised – as citizens in the US and beyond consider a new era of governance, and how to achieve concrete change between election cycles.
The case we launch with, Aziz v Trump, considers this very notion of citizenship, or perhaps more fundamentally, of having rights to stay and live and contribute to a place that is not your place of birth.
Tareq and [Ammar] Aziz, two brothers and citizens of Yemen, were stopped from entering the US despite having lawful green cards to which they are entitled because their father is a US citizen. They were then forced to fly to Addis Ababa airport in Ethiopia, two hours after Trump signed his now infamous executive order banning citizens from seven countries from entering the US.
Their lawyers and the Legal Aid Justice Center argue that these actions are illegal. They are standing up for the rights of the Aziz brothers – and indeed of many others – to enter the US as lawful green card holders.
It has never been more important for people to have the means to access the legal system. CrowdJustice provides a way for communities to come together to participate in that system by seeking justice for those who might not be able otherwise to achieve it.
In the UK, we have seen thousands of people come together around cases that implicate important issues, and indeed create real change, whether on issues of national importance (the recent Supreme Court case on Brexit) or in their local communities (demanding clean air).
In the US, the justice system is robust. Communities have demonstrated a strong desire to play a role in democratising access to justice. We are excited about the possibilities, in 2017, to use technology, and the power of communities to increase access to justice in the US and beyond.
- Julia Salasky, ‘Launching in the US’, CrowdJustice Blog, 31 January 2017, available at: www.crowdjustice.org/blog/launching-in-the-us