Scott Hardy - topclassactions.com

Welcome to another Founder Wisdom pod. We have Scott Hardy with us. Scott is president and founder of Top Class Actions, uh, and the law. Yeah, Legify Law and Trimaxian in Phoenix, Arizona. Uh, he's not a lawyer, like you told me last time. You're a guy that just set up technology for— pieces of technologies for lawyers or related to law, right? So welcome to the pod, Scott. Tell us a bit more about yourself and what you've been up to.

Thanks.

Yeah.

I mean, I started Top Class Actions 18 years ago to connect consumers to lawsuits and settlements. And then I just kept pivoting the business until I had a profitable company. About 5 years ago, Arizona changed the rules to allow non-attorneys to own a law firm. So I went ahead and was one of the first law firms approved in Arizona with that new ABS structure, which is based on the UK. Law firm structure. And now for the last 4 and a half years, we've just been sending about 80% of the clients that we meet with, our 2 to 3 million viewers a month we get on Top Class Actions, over to LegalFi Law to sign up. And now we've got about 25,000 clients, and we work with about 50 law firms around the country to make sure that our clients get just rock-solid representation. And then I had a cash crunch a couple years ago, and so I started Trimaxion. So I'd raised money from accredited investors, loan it to my law firm, which spends it at Top Class Actions, so that way our investors are able to make money when the cases settle, and, uh, I had operating cash flow. That saved my bacon. Nothing like necessity to make new companies happen.

I love it. We're gonna come back to that cash crunch a bit later. You started at AOL, then Sprint. You were, uh, account/client manager back then, right? What prompted you to launch your own company in 2008?

Yeah, so I was at AOL. I started off as a call center rep, tech support, back in the '90s. I was there when we had 100— celebrated 100,000 members, all the way to 33 million. So it was a really cool ride. AOL was awesome. And then all of a sudden the dot-com bubble burst. I was out of work. I was a mid-level IT manager in Tucson, Arizona with no options. My life kind of fell apart. I had a real rough year. I was actually working cargo for Delta Airlines at $15 an hour just to have a job. And then I got a call from what was Nextel Partners that were— they were acquired by Sprint. But before that, they said, hey, Scott, we're rolling out this device called a BlackBerry. We think it's going to be a big hit. Will you come and help us grow the data support teams there? So I did. And it was another great ride. Just really good people. I had amazing managers there, amazing people to work with. And then that group sold to Sprint. And my wife and I said, all right, we, we didn't want to move to Atlanta. Because we're talking about kids. So let's move back to Phoenix where we met on a blind date in Las Vegas through mutual friends from Tucson where we both grew up. So we moved to Phoenix. I got into cloud computing sales after a short jaunt in call center with a company called Limelight Networks. And Limelight was where I had the idea for Top Class Actions. I was flipping through a magazine and I saw an advertisement for the Airborne Health Supplement Settlement. And that was a little fizzy tablet you dropped into water so you didn't get a cold. And everybody I knew had taken this supplement. And I talked to my friends. I'm like, hey, are you aware of this class action settlement? It's $63. Literally just go online, spend 60 seconds, and you'll get a check for $63. And no one had heard about it. So I said, man, there's got to be a website which tracks these easy-to-claim class action settlements. And there wasn't, so I built it. And that's what happened with Top Class Actions— just built the website and then just kept iterating it until we started to have a profitable company.

What's the morality of, uh, class action lawsuits? I feel like society needs it, consumers, right? Because corporations are sort of, uh, most of the time taking advantage of consumers. But on the other side, there's predatory lawyers that just use this to make tons of money, right? When there's no legal basis or a moral basis behind their lawsuit and that destroys companies and companies are in charge of the economy and do good things.

It doesn't destroy companies. I mean, so I think it's important to note that what we're doing on the class actions that I'm involved with overall are helping the consumer because, and I, you know, there's examples where you have fees that get added and I'm not going to name the company I was with, but we did this in the past where we added a fee to everyone's invoice and we put it right in within the taxes. So it looked like it was a tax, you know, a country or state tax. But it wasn't. It was a— I think it was a $15— maybe it's a $5 or $15 a month fee that we just added to help us build some tech. And so if you noticed it and you called us, we would go ahead and refund you. If you didn't notice it, you paid the fee until about a year and a half in, a class action lawyer saw that fee and said, what are you doing? You're intentionally hiding this fee. And most people aren't even aware of it. And that's really what a lot of these class actions are for. It's because you as an individual, an American, can't sue. I mean, you could sue somebody over a $15 charge, but you're not going to. But a class action lawyer will go in there and say, hey, I can get a million people who were charged this $15 charge. And now it's worth— it's worthwhile to sue that company. And get that back. And that's what we're trying to do. And that's what class actions are for overall, is just to help the little person get paid. And people go, what, the attorney's got a $10 million fee on that? And we say, yeah, the attorney's got a $10 million fee, but we returned $30 million back to consumers.

Yeah, yeah, my point is more when the case is frivolous, right? And the lawyers invent something that the company is not really guilty of, and they just go to the consumers and say, hey, look, they're evil and they're doing that. And there's a lot of that, you know, that in the US there's a very strong culture of lawsuits, right? Frivolous lawsuits that don't make sense whatsoever. And then a company that is adding value to the world gets like bankrupt by this class action lawsuits.

I mean, that's something that, that's a narrative that's shared by the insurance companies who are paying for these. It doesn't make sense for us to go after company and bankrupt them. If we go after a company, we bankrupt them, then no one gets paid.

I mean, they pay, they pay the class action, then they go bankrupt.

That doesn't happen. I'd love to know some examples of that happening because in general you don't go after it. Now, companies may file for bankruptcy or threaten to file for bankruptcy protection, like in Johnson Johnson. They said But what they did is they have a very profitable company. They moved all of their talcum powder claims to a new company and then said, now we're going to file bankruptcy for that company. They're not actually bankrupt. They're making billions a year in profit. And so you, what typically happens in a case where, you know, especially if it's long ongoing, is you, you check to see what can insurance pay. And then you take it to that level. Nobody wants to bankrupt American companies. No one wants to, you know, all we, all we're trying to do is make sure our clients get paid and that they, the injury, people say, oh, these are spurious lawsuits. There's no legal merit. Well, if there's no legal merit, then it's going to get thrown out by the judge. And attorneys, especially plaintiff attorneys, only get paid when the case is settled and they win. Attorneys don't make any money. They— and these cases can go for years. And so that's part of the reason why the attorneys get a third to 40% of the claim in the end, because they're working for $0 for anywhere from 2 to 10 years before they see any, any payment. And if they lose— and you lose sometimes, it happens— you see law firms go bankrupt. Because they bet all of that work on it.

But the, the 2 to 10 years, that's what you're solving, right? You're helping them finance this lawsuit so that they can get paid in real time and upfront and not like 2, 10 years down the line, right?

No, typically if, if a law firm is getting any kind of litigation finance, it's to cover operating costs. It's not, it's not to give them any kind of—

and the lawyer is $500 an hour. That's operating costs.

No, you don't, you don't, you don't pay them their full, uh, hourly rate on that. A lot of times it's usually that money is actually spent, uh, going to expert witnesses. Expert witnesses could be $500 to $1,000 or more an hour. And so when you're going into these cases, that's where most of the finance money is going into. And then if you're suing a large multi-billion dollar company then, or could be a trillion-dollar company nowadays, then, you know, they have an army of lawyers who they're paying $750 to $1,500 an hour too. And so you'll see it stacked like it— when you'll see us in the courtroom against Meta and Google in our social media cases, uh, this month, and you'll see the stack of the defense lawyers back there And then you'll see on the plaintiff's side, 3 to 5. That's it. You know, against a dozen.

I just think it's a very good business. Um, it's like maybe just the ethical, moral side as someone that like promotes entrepreneurship and business. But you sue corporations, right? I also don't like corporations. I think most of them are parasitic. Um, but you, you make sure that they're big enough and that they're insured so that if you win, they can pay the full settlement, right?

Correct. Yeah, I mean, it doesn't make sense to go after the mom-and-pop diner that's doing something illegal. And, you know, you don't want to bankrupt anyone. That hurts the industry, gives us a bad name. It's, you know, you want to make sure that you're going after the folks that you can actually get a recovery for your client and you're not crushing the folks that it's pocket change for them to pay for a settlement.

So what's the average settlement in the hundreds of millions? Is that what you're aiming for?

No, I mean, you see in a class action, you might see a $500,000 settlement, or you might see a $100 million settlement. It just depends on what the damages are. If you're going—

is that what you're aiming for? Because that seems so small, $500K settlement. Like, why even get involved with that in the first place?

And so I'll give you an example right now. So one of our co-counsel is going after a large ticket reseller, and they have to go in and sign each individual client, and they have what's called mandatory arbitration on these tickets. And so you can't sue this defendant as a class action, at least up front. You have to go up and you get a list of dozens of individual clients, sometimes hundreds, sometimes thousands. And they say, hey, we paid this much more than we should have for these tickets. And these folks are seeing an average of $250 to a couple thousand dollars that they overpaid for event tickets. And now we go— that lawyer now goes in front of that ticket broker and says, here's my client, you owe them $1,500, and then there are these other fees because of some other problems. And he's going to end up getting a settlement for about $500,000 across all of those. Right. And his clients are going to get two-thirds of that. And then he's going to go ahead and get a couple hundred thousand. Now, he's a lawyer that's a one-person office. He doesn't even have a secretary. And that's what you see in the class action and plaintiff space. Is you see people specialize in one specific case type. And so you'll have those guys, and then you'll go on the other end of the spectrum where you'll have a big mass tort law firm that's got hundreds of lawyers and hundreds of paralegals, and they're the ones that are going to go for a billion-dollar, a multi-billion-dollar settlement because they're going to represent thousands of clients, sometimes tens of thousands of clients, for very severe injuries that could be $30,000 in damages per person all the way up to $1 million in damage plus if there's a death involved.

Right, right. I'm on your website here and many of these class action lawsuits I'd probably get behind, like, ethically, because it's something that I'm against, right? So TikTok, for example, right? I see gaming addiction, which is another big one.

Do you want to hear something interesting?

Your online casinos, right? Or porn would be another one. I don't see porn on your website. It's like, it's stuff that is detrimental to society, right? Yeah, yeah, yeah.

I mean, it's so— with the, um, gaming addiction, it used to be when I was a gamer back in my teens and 20s, you could log in, save the game, and leave. And now you need to stay in the game, and they've put in all of these additional connectors that, that feed your brain and give you that, that hit, just like cocaine, just like addictive drugs that give you that pleasure. And that keeps you in where these gamers are playing for 30, 40, 50, 60 hours a week. And that's obviously not healthy. And you'll have healthy kids that then get into a— get into the games and then they— their social friend group goes from real life school to all of a sudden it's online, and they lose these real life connections. And that's happening to kids as young as 4 or 5 now. And so that's an incredible litigation. With internet gaming, it's also very interesting where we see different defendants that will sit there and see You know, they know exactly what games you're betting on and they know exactly how much you're losing. And then as soon as they think you're losing a certain amount, they pop up, hey, here's a free bet, or here's a bet that's going to give you much better odds that they know they're going to lose. But you place that bet, you win, and then, oh, you're like, I'm a winner, I know what I'm doing, I'm the best gambler in the world. And all of a sudden it keeps going and you just keep losing money. And that's the way a lot of these, some of these internet gambling apps are working. They see you losing, they give you a win, so you keep spending money. And it's obviously hurting. And what it's the, uh, the factors for teens and specifically young, largely young men, largely young men are the victims on video game addiction. Largely young men are the victims of internet gambling addiction. And, and so it just, it just puts them at a deficit.

And what's the business model behind Top Class Actions? It just— I mean, you have ads on the website, right? But you also take revenue if you plug them into a lawsuit. Like, how does that work?

Yeah, so the, the ads that we show there like the clickable ads, those are less than 10% of our revenue. It's just cash flow, right? Um, largely the ads we make are from charging attorneys to advertise, and the biggest client now is Legify, my law firm. And so, you know, the law firm pays Top Class Actions a flat monthly fee typically to advertise for a specific type of client. And because all of traffic, all the traffic that we get on Top Class Actions is organic, we get about 2, 1 to 2 million viewers a month organically through SEO with Google. And then we get the other 1 to 2 million viewers a month through our social media and our email marketing. And all of that is just what we've built over the last 18 years. And so we've built this moat around Top Class Actions where we saw like a 20% user growth from 2024 to 2025. I'm sorry, a 45%— I'm looking at my numbers right now— 45% increase in SEO clicks from 2024, 2025 over 2024. And even this year, year to date, comparing last year, we're still at about a 10% increase in organic clicks year over year. From the same time last year. So we're still growing organically and naturally. We're focused on how we rank in AI, how we rank in still on Google. We've gotten much better at our email newsletter. We send out a million plus emails 5 days a week.

Interesting.

We've got a very high rate.

I'm reading some stats here. You've been profitable since 2011. 100% growth every year since its inception. So I need 100K per month, is that their average revenue nowadays?

No, no, no, no, uh, you know, our base revenue is about $500,000 a month, and then we get big swings in for different big marketing campaigns at Top Class Actions.

So how did you get that cash crunch then at $500,000 a month? How did that happen?

Because when you're making $500,000 a month and that was when Top Class Actions had 40 different law firms it was charging for advertising every month. But then I changed our business model to send everything to Legify Law, and Legify Law didn't have any money. And so now Legify Law has a huge chunk of debt that it owes Top Class Actions.

Why did you do that? Why did you kill your golden goose?

Because it takes our revenue— no matter what I was doing at Top Class Actions, I was topping off at $5, $6 million a year in revenue. And I tried different case types, I tried all these things, but there was no way that I could do it, um, without having a law firm element of it. And so by me being able to have the law firm, then I can still plateau Top Class Actions at $5, $6 million a year in revenue, but now my law firm is the one advertising. And so now that takes the annual revenue to tens of millions of dollars because I have a law firm that can share in the attorney's fees long term. And so Top Class Actions stays profitable, kicks— it'll kick in about a 20, 25% profit. And then Legify is bringing in tens of millions in attorney's fees by the end of next year.

But there's a lot of costs with Legify, right? So no, how much lawyers do you have?

One lawyer, six employees. Yeah.

Wow, that's very lean. How do you do that?

By necessity.

Because you must have like all kinds of automations and AIs, right? Like Knowing You is like—

yes. So we have a full AI platform now that we've built. We've got, and it's all on the Top Class Action side of things. And then we try to automate our interaction with our clients. And so make sure that we're sending them updates on their cases and all of this stuff that happens on a monthly basis. And just, it's, it's, as you said, it's just creating all these automations and taking care of the clients. Knowing that, oh, this client wants to talk to a real person, great, that goes to our team that will take care of that. But it's, it's most people in these cases, they sign on, they get confirmed that they qualify, and then there's really not much they have to do until we get the case settled. And then it's back to talking to them again, saying, hey, signed your release agreement so we can send you a check. And then great, they sign it, they get their check, and, but it's, it's not necessarily high touch in the meantime.

I love it. Um, and then Trimaxion, which is like the trifecta, right, of your empire. So you have—

it's your triangle of awesome.

Yes, it's like fetching money from high net worth individuals to fund these suits, like the missing piece. Why? Tell us a bit more about that one and why you started it, uh, 2 years ago.

Well, I had that cash crunch where I'm going, all right, I want to keep sending cases to Legify. I went out to traditional litigation finance funders and I wasn't able to raise any money. They're like, nope, you're too new. It's, it's too risky. And so then I talked to one of my investors who was an investor in the first two companies, and I said, hey, I think I have an idea of how we can act as our own litigation finance arm. Help me fund the company. So he reached out to his group of friends who are all investors, and we got about $750,000 as our stake to start Trimaxion itself. And then we launched our first fund, and so that's for accredited investors. And our first fund was focused on necrotizing enterocolitis, which is a baby formula, uh, well, it's a, it's a baby formula that's given to premature infants., but it can cause necrotizing enterocolitis, and about 60% of babies who get this die. And so it's a cow's milk-based baby formula. And so we launched this campaign, raised about— the first fund was about $1.5 million. So we raised that money, loan it to Leagueify, who then spends that as advertising money at Top Class Actions to sign the clients. And that kept Top Class Actions alive, which therefore kept Leagueify alive. And then we started our second fund focused on video game addiction. That was about $750,000. Again, that money gets loaned to LegalFi, who spends it at Top Class Actions, keeps the cash flow going. And then our third fund is social media harm. And so that's worked out. Now I think we're going to see at least one of the defendants settle that one by the end of the year.

What's my return if I invest $1 million in one of these? Is it I don't know, 20%? And is it 3 years down the line? What's— what are potential returns?

You know, typical litigation—

without giving financial advice.

Yeah, I mean, this isn't— I, I, of course, no financial advice, but typically litigation finance returns, you're looking for a 2 to 4x return on your investment. It's, it's large because this is going to be multiple defendants. Like on Video Game Addiction, we have 12 different defendants, and so we sign up one client there they're going to go ahead and qualify for 3 to 5 different defendants. And so each time they get paid, but it's being a litigation funder now is interesting because now I've got a group that wants to fund my law firm as a whole. And so now we may end up buying out our Train Action investors where they're only going to see a 20 to 25% return on their investment. Year over year. And so, you know, that's still a great annualized rate of return, right? So we'll see what shakes out if we do that, if our investors are okay with it. But most of our investors were like, you're going to give me a 20% or 25% rate of return? Yeah, give me, pay me, and we're happy to then, you know, flip it to another fund, right?

Right. Oh, I love it. Uh, Scott, where can we find out more about you and your companies?

Uh, largely it's— we're on the corporate side, LinkedIn is a great way to go. Uh, we are very— Top Class Actions is very, very active on Instagram, TikTok. So if you want to know about these settlements, great place to go. And especially if you're a consumer and you want to find out what you can claim, just go to topclassactions.com, follow us on Facebook or Instagram or TikTok or LinkedIn. I'm available on LinkedIn. You always use an introduction if you want to chat with me personally, uh, from a business perspective.

That was Scott and Charles Cormier, CEO