BAY AREA FIRM TAKES STAKES IN COURT SUITS.

Byline: Julie Stoiber Knight-Ridder Newspapers

Congratulations. You've just won your case, and the jury has awarded you $2 million.

Do you pay off your lawyers and head for Bali? Hardly. You wait for the lawyer on the other side to file an appeal. It'll be years before you see that money, if ever.

Then again, maybe Alan Zimmerman and Michael Blum can help.

At their year-old Judgment Purchase Corp. in San Francisco, a litigant waiting for money is an investment opportunity waiting to happen.

They offer cash now, and bank on a higher return once the appeals are exhausted and the judgment is paid.

The partners, both 53-year-old lawyers, launched their idea in California and this month began trying to drum up interest in Pennsylvania, New Jersey, New York and Connecticut.

"Standing up to the big guys takes a lot, and that's where we come in," Blum said. "One of the things we obviously have to do is evaluate the risk."

That means giving the trial record a thorough going-over to establish the likelihood of the judgment surviving an appeal.

In the case of the $2 million verdict, Blum and Zimmerman might decide it's such a solid case they want a 25 percent stake - their maximum investment so far. They wouldn't pay you the full $500,000, however. They make money by buying in at a discount; their offer might be $300,000 for that quarter share. Assuming the judgment is affirmed and eventually paid, they walk away with a profit of $200,000.

"We like to say it levels the appellate playing field," Blum said. "It provides funds for a judgment creditor or an attorney . . . to hire an appellate specialist."

Before Zimmerman and Blum put money on the table, they must be satisfied that the client is committed to the appeal and has hired a qualified lawyer to handle it.

"We want to win," Zimmerman said.

Should the judgment be reversed, Blum and Zimmerman get nothing.

The idea for Judgment Purchase originated with Zimmerman, who was a Bay Area business lawyer for almost 20 years before leaving law to pursue business interests.

Several years ago, he got a call from a lawyer who had won a sexual harassment suit against a law firm on behalf of a client. The firm was appealing, and the client was out of money. Zimmerman's financial-services firm agreed to advance her money for the appeal.

He figured there were others in similar straits. "They have this asset, which is basically a piece of paper from a court, which may or may not have value," he said.

Evaluating whether a payout is likely in the end is a complex process involving computer models and an analysis by an appellate specialist.

In Pennsylvania, Judgment Purchase has retained David H. Marion, a well-known trial and appellate lawyer with Montgomery, McCracken, Walker & Rhoads in Center City, to evaluate prospective cases.

It was such a new idea that Marion had his firm's ethics committee review it. "We wanted to make sure there were no problems," Marion said. "There are many positives. I don't see any negatives."