Freedom Money Episode 19 Ronald Lasorsa

Today on the show, we have Ron LaSorda, a different kind of episode, not directly in the Bitcoin space, but financial innovation nonetheless, and, uh, something I wanted to highlight. Welcome to the show, Ron.

Thank you. It's actually Ron LaSorsa. Tommy LaSorda, yeah, Tommy LaSorda was an old, uh, Los Angeles Dodgers manager, so it's often mistaken for that, but it's La Sorsa.

I am very sorry, Ron. Um, so maybe you can start giving a little background, um, and how you got to this place.

Sure. So I'm a graduate of the United States Naval Academy, uh, Marine Corps infantry officer, combat vet during Desert Shield, Desert Storm. Um, got my MBA while I was on active duty and then went to Wall Street for over a decade as a derivative trader and investment banker. And I've been engaged in the business of law since 2010. And, um, it may be, uh, uncommon knowledge, but in my experience the legal services industry, law firms, litigation finance, are pound for pound the most profitable asset class that I've ever run across. And quite honestly, because of my background in adversarial activities, uh, it is the most exciting space I've ever been in. So, um, I am grateful for the opportunity to, uh inform your, uh, your viewers about the opportunity.

Uh, well, I, I guess let's get into it. But first, thank you for your service.

You're welcome.

Um, you mentioned that it's the most profitable area you've seen. Why, why is that?

Several reasons. Um, the business of law is— has high barriers to entry, right? There, there are, um, it's a cartel really where many states, most states prohibit the sharing of legal fees with non-attorneys, although there is a— there are several jurisdictions in the country, District of Columbia and Arizona, that offer non-attorneys the opportunity to own law firms. And in fact, I owned a DC law firm back in 2012, um, and had a $40 million exit in less than a year. And so, um, you know, the stereotypes of lawyers being corrupt and greedy are in fact true. And when, uh, you don't say, yeah, you know, stereotypes exist for a reason. But when you see the type of, um, the type of profits associated with the delivery of, you know, justice, right? You get as much justice as you can pay for, and that, that's a travesty. But so, high barriers to entry. It is highly fragmented. You know, there are 1.3 million lawyers in the, in the country, and there's a stratification of of different areas of practice, right? And so I operate at, in, in, at the pinnacle of legal services, which are called mass torts, which are these large multi-billion dollar settlements with tens, tens of thousands of plaintiffs. And so it's highly fragmented, but at the very top, there are very few attorneys that specialize in the area that I do. It is wildly inefficient because it's so profitable. But that's changing as well, right? Because of AI. There are two different types of pricing model in, in the delivery of law. There's billable hours, which is about to be decimated through AI, and then you have contingency fee, which is primarily around, um, trial work, right? And the fees in that area in mass tort are between 40 and 49% of the gross legal award.

Wow.

Yeah, so, so it is hugely profitable. I'll use an example. As I said, I'm a veteran, and one of the, um, the largest mass torts in American history was around 3M Combat Hearing Protection, where 3M, the company, produced a defective device, hearing protection, where during the Global War on Terror, veterans, primarily Army and Marine Corps, artillery officers, infantry officers, or infantry as well, um, suffered hearing loss. And so there are about 240,000 plaintiffs in that litigation. There was a $6 billion settlement, and a very small handful of lawyers collected, um, 49% of the legal fees. And so it, it So you got, you know, you have a small handful of attorneys collecting, you know, you know, almost $3 billion, and, um, and then you had roughly 240,000 plaintiffs sharing the balance. And so you can see the disproportion— this disproportionate ratio between the plaintiffs and the attorneys, right? Yeah. My, my model addresses that economic disparity.

All right. I mean, I definitely see— I mean, you've touched on a number of points here in terms of access to justice is kind of access to what you can pay for. And I think that's important. We can dig down on that. Does this give people additional access is kind of one question I have, or potentially? And then just a question about those people splitting the fees. Are those direct are those lawyers directly involved in the process, or are they just affiliated with the firm in some way to get the payout?

Well, that's the problem there. So, um, access to justice is dependent upon marketing, right? Awareness of the issue. And so the way that you do that is through advertising, and that costs money. And so that draws in, um, what are referred to as third-party litigation funders, primarily private equity, venture capital, hedge funds, who, uh, make usurious loans to these law firms. And those loans—

usurious loans— I mean, at the end of the day, like, here's kind of my pushback on that. They're giving people access to justice potentially, and there's an uncertain payout that that they have to discount quite heavily because they don't know if the corrupt justice system that brought it there in the first place is gonna be the same one that rules on it. And if it does, how, how that's gonna go in their favor.

Well, certainly, well, you know, litigation finance in and of itself is but a tool. It's, it's how you, how you deploy that tool. Right. And so many of these, yeah, I'm gonna touch on a lot of topics. This is a very, very—

I mean, they're, they're there for the money, right? They're, they're like, that's why they're there.

They are, and they charge what the market will bear. But part of the scam in third-party litigation finance is what's referred to as loan-to-own, right? So these lawsuits are— have unpredictable duration risk, right? You file a lawsuit, you don't know when it's going to settle. So these law firms enter into loans anywhere between 20 to 24% per annum compounded. And if the litigation, like Johnson Johnson, lasts 10 years, in many instances the law firms go upside down and they owe more. And so those, those third-party litigation financiers pressure the law firms to settle lower and faster than allowing the the ethical lawyers to fully prosecute the claim. So there are many layers of inefficiency and corruption involved in this.

Beautiful.

And by the way, I'm a whistleblower bringing these matters to light because I myself, as I said, was the owner of— as a non-attorney owner of a law firm that created a docket of 15,000 cases, uh, in transvaginal mesh, which is a medical device that affected women. We sold it for $40 million, and, um, in less than a year. And, you know, that, the, that transaction is the subject of a book that just came out called The Pain Brokers, where, you know, there were many, many problems with that transaction, primarily around identity theft and fake cases. Because, yeah, so as I said, this is extremely complicated and messy, but if done right, highly profitable. And more importantly, those profits associated with the delivery of legal services can be redirected to nonprofits and religious organizations to enhance the social impact. So my model is radically different than anything else that exists there. We're not going to be able to unpack it on this call, but I very much want to begin the process of educating people about the problems that exist now and the alternatives that I offer.

Well, I, I appreciate you coming on to do that. I, I know we kind of danced around it a bit, and again, I know it's, uh, maybe not something that can be distilled down into a sentence, but is there, is there a mission to what, what you're trying to accomplish? And then if you can tie that into what, what is actually being built kind of right now in terms of where you are in the process.

Yeah, again, I, um, I intend to reform the delivery of, of, uh, of legal services in the United States, and, um, the primary beneficiaries of my efforts will be the veteran community. As a veteran. I see that, in my opinion, veterans are mistreated and undervalued and being taken advantage of by unethical lawyers and third-party litigation financiers who are cashing in on their service to our country. It is, it is detestable. And I've written a white paper on this. I filed lawsuits, bar complaints. I've left no stone unturned. But at the end of the day, as a Marine Corps infantry officer, I got to start cracking some skulls in order to change the business. This is a very adversarial project. This is not kumbaya Bitcoin bullshit, if I may. This is litigation finance, and it is a knife fight, and I fucking love it.

Amazing.

Yeah, I'm just sorry, sorry to come at you full throttle, but this is who I am. And, you know, here's the thing. This is the wonderful thing about litigation finance, right? There's no intrinsic value in law firms, right? The, the, it's the attorney who is the asset with predictable value. Starting from that point. But it is the plaintiff, the victim, that drives the ship because they choose the law firm that represents them. And here's the thing: if they have existing legal representation, they can fire that lawyer and hire another lawyer. The victim is the one in control, and they don't know that, and the lawyers don't tell them, right? And so That is, you know, that is the, the, the foundation of sand that the existing business model is, is built on, right? They keep that knowledge from the plaintiff, right? They think that they're stuck. They think they have to pay legal fees. There's profound pricing pressure in this because there's a distinction in how these cases are litigated, right? There are very few number of attorneys that try a very small number of cases relative to the docket. Everything else is handled administratively where it's, it's paperwork, right? And they hide that shit so they can rip people's faces off.

So I find it interesting. I mean, you're, you're coming at it from, uh, the angle of veterans, and obviously that's your experience, and you've seen firsthand how they maybe got the short end of the stick in a number of situations. I, I can tell you, you know, I, I stay as far away from the Matrix and, uh, certainly, uh, legal processes as I can, but, you know, having lived 50 years, you get tied into a few things here and there. Um, and, and my experience with the whole process and, um, is, is that it is there entirely to benefit the participants of the process, the lawyers, the judges, the, you know, the prosecutors, give them this grand sense of self-importance. But in terms of the actual distribution of justice or doing anything to, uh, you know, improve the outcomes for the victims, uh, you know, I'm not, I'm not sure I see that in the process.

And at all. Um, so, well, they hide it well. I, I don't— you know, the, the delivery of legal services is a racket. I hate to, I hate to burst your bubble, but the courts are in on it. The, the, the plaintiff's attorneys are in on it. The defense attorneys are. I mean, I— again, my, my view may seem jaded, but it's because I know too much. I've been involved in it myself.

Well, I think anybody who's been involved shares the same jaded view, right?

But I've seen behind the curtain and I know how the sausage is made. And so, um, you know, the fact of the matter is, is that it is a racket, right? But it is a profitable racket whereby I can, I can take revenue from these scumbag lawyers and put it into social causes. Right? It is, as we would say in the infantry, a raid on a soft target, because these lawyers are fat, stupid, and slow, and I will outmaneuver them, right? But that's not to say they haven't— you know, this is litigation finance. You know, they throw punches just as hard as I do, and I've been banged up. But the thing about being a Marine is when you knock me down, I get up stronger. And so this business model is not really a business model, it's a battle plan, and it's been tested through combat, right? I have been involved in litigation with multiple attorneys. I intentionally, uh, incurred a $600,000 personal judgment to break a non-disclosure agreement. So whereby most entrepreneurs do everything they can to avoid litigation. I embrace it, right? That's, that is a fundamental difference. And that, that's what most litigation finance asset managers don't understand. Most litigation finance asset managers deploy other people's money in, you know, in other people's litigation, where I took on a personal judgment and pursued my own litigation. To, to bring this business model forward. So, uh, you know, I, I may sound crazy to many of your viewers, but there's a method to my madness.

So just to back up, and, and one of the issues I think we're talking about is, uh, you know, we're moving away from flat fee lawyers to contingency lawyers, and there's kind of a whole incentive problem there that Uh, you know, with bringing false claims and potentially other things that, that come up and sharing in that and other things. Do you want to touch on those conflicts at all?

Wow. So, so, um, flat fee and billable hour, right? There's, there are a glut of attorneys out there. There's, as I mentioned, it's highly fragmented. And flat fee and billable hour work are applicable to different areas of practice, right? So real estate, contract law, you know, family law, right? And much of that work can be delivered through AI. There are Rocket Lawyer, LegalZoom, right? These are DIY type of things. There are many different do-it-yourself divorce sites.

Claude.

Well, Claude hallucinates, right? So we're at the very beginning stages of that kind of transformational process, right? Where AI can empower the plaintiff to do it themselves and disintermediate the lawyer. That's a separate part, and I'm going to be honest. You know, temperamentally far less interesting to me. I love litigation. I love the fight. And the jury trial is the ultimate determinant of the award, right? And so I have profound respect for litigators, many of whom are scumbags but are very good, right? And it's, it's, it's those people who rise to the top because they're vicious. And so I focus primarily on litigation because of jury trial. Right? And in that, um, individual jury trials have their own award— personal injury, any, any type of litigation like that. And I characterize that as selling pizza by the slice, right? That is less interesting to me, although personal injury is one of the areas of practice I'm going to focus on. I, I am— my expertise is on mass tort and class action. Where there are many plaintiffs in a particular lawsuit, right? And so I start at the tip of the spear, and then I can— and I can apply these, these, uh, market efficiencies, if you will, to the overall delivery of justice.

So now I think I, I understand the model better than when we started the conversation. And I'm just curious, what you're proposing is a bit different. So what kind of tech and operational regulatory challenges do you, do you bump into trying to bring this new model?

So let's talk about the, the, um, regulatory challenges first, and then we'll get into the tech.

Because I find, I find, Ron, when I do this podcast, the regulatory challenges with any, any of the businesses I'm talking to in the Bitcoin space, or, you know, innovating in finance. I mean, this is, this is what people run into, right? Like that brick wall right behind you, right?

Exactly. So, so, uh, as I said, there's a prohibition on, in most jurisdictions, with sharing legal fees with non-attorneys, right? And again, that's out of self-interest, where these bar associations have what they refer to as unauthorized practice of law and so forth. It's all bullshit. These bar associations are part of the corruption. But Arizona has instituted— and it was the Arizona Supreme Court that did this, so it's not the Arizona Bar Association, two different parties— Arizona instituted a new law where non-attorneys, corporations, can own what are referred to as ABS law firms, alternative business structure law firms, right? And what they're doing is they're pairing it up with Um, so the ABS law firm is responsible for the practice of law, the litigation, the lawyers, right? And then there is a second entity called an MSO, or management services organization, that provides the services associated with the business of law— victim identification. So in my model, I refer to it as victim identification, victim verification, and then litigation finance. And so I've created an MSO referred to as the Ethical Lawyer Network, where I'll be providing those services. Later, I'll open an Arizona ABS in conjunction with that. And what I'm doing is I'm building an alternative plaintiff's, plaintiff steering committee structure. So at the very top of these litigations, what they do in their cartel function is the judge— who many of these judges serve on multiple multi-district litigations. They pick the same lawyers, 10 to 20 lawyers, to litigate the case, right? And then they have other law firms who refer them the case, right? And the, the pricing disparity is all of the lawyers charge a flat 40% fee, and that's— they pull that out of their ass. The Federal Tort Claims Act caps litigation at 25%. And then the vast majority of these cases are handled administratively, right? And the Federal Tort Claims Act caps that at 20%. So the top guys get their 40%. And if they litigate, you know, for the bellwether cases, they charge an additional fee. It's kind of crept up to 9% now called the common benefit fee. So the pricing structure, the way that it— the way that it's currently, um, implemented is horribly skewed for the amount of work done for the vast majority of cases, right? So my model is different. There's pricing power in there. I'm going to adhere to the Federal Tort Claims Act, um, fees.

So I'm just curious if— I mean, this seems like it would be a big market.

Um, it's a huge market.

Others involved in bringing efficiency to the space, do you have competitors looking to do similar things?

Or certainly right now there are about 150 Arizona ABSs. The MSO model is being, you know, developed from competitors, but I have something called unique selling proposition, right? As a non-attorney veteran Um, I intend to focus, you know, my Arizona AVS will be a public interest law firm. We'll serve all clients, but there's a comparable in the market, right? USAA Federal Savings Bank was a bank and insurance company set up specifically to handle the veteran community, right? And so, you know, I'm tattooed, I speak roughly. And then when I speak to the veteran community, they'll have a choice, you know, between me, who has, who has, um, you know, evaluated the best attorneys in my ethical lawyer network, or, you know, the, the, the middle-aged white guy schmuck who, who has no— who looks bland. And so I'm going to give the veteran community and others, right? A choice. And I've built a track record of both success and non-conformance in the space. Let me, let me point out another distinction. There are 3 types of participation in the revenue associated with legal services. Equity, which again, high barrier to entry around non-attorney participation. Debt. Which is often usurious and has what I refer to as duration risk, and then revenue share. Revenue share is the best way to do it because it's non-usurious, it has no, it has no duration risk, and I intend to, um, to pay investors 10x. So dollar in gets 10x out against against, since we're, you know, you're a Bitcoin guy. I think Bitcoin is, you know, a fiat currency in this, um, legal— I know, I know, I know, that's a topic.

We should keep the topic away from Bitcoin then. Okay, because we only have 3 and a half minutes left, and it's certainly not a fiat currency, right?

So, so a legal judgment is among the most secure real-world assets in existence. And that's what you're doing. That's why a security token is more appropriate, right? Because you, you, you are— it's a fixed flat fee per case in revenue share against a legal judgment. And so other than real estate or commodities, legal judgments are among the most secure real-world asset out there.

No, it's amazing. And you can see it trading in real time as probabilities go up throughout the, uh, Well, another—

yeah, another part of the project is there's no secondary liquidity in this, right? So let's say somebody doesn't want to stay in for the full 10x, or I'm going to create a donor-advised fund where investors can allocate a portion of that 10x to a nonprofit. But I'm also going to provide secondary liquidity in the market in that there's nobody in real-world assets or security tokens who step up and make a market. That's what I did on Wall Street. And so not only will I be an issuer, but I'll be a market maker in these revenue share security tokens.

That's super interesting. Um, all right, I, I think, I think we're going to have to do other episodes and see how this model evolves over time. I mean, do you have, uh, maybe if you can leave us with a few hints in terms of what you see as kind of the immediate next steps in the space, and then, uh, if you have any advice for builders. And I think I know what that advice is.

Well, so I'm launching a project, uh, as this conversation may have alluded to. There is no other— there is no litigation finance asset manager that will understand this shit because they don't have the expertise that I do. So I'm starting a case study. Right now, I've formed a Wyoming LLC as the management services organization, the Ethical Lawyer Network. I'm going to begin originating cases in 3 case types. Mesothelioma, which is the pinnacle of profitability because those cases go on average between $1.5 million and $3 million, some as high as $8 million. I'm gonna begin originating cases in that. Asbestos lung cancer, and then motor vehicle accidents. I have a budget, $3 million budget for a 12-month project. I'm going to show people exactly how I made the $3 million because, again, as an asset manager, I'm going to be providing transparency and audited financials. Right. That's another thing that's missing in this space. There's legislation in, in multiple jurisdictions. To provide transparency in third-party lending because it's completely opaque. These lenders don't want to show their loan agreements with law firms. I'm going to make everything publicly available on the blockchain to distinguish myself from everybody else.

Amazing.

So stand by.

You know, I, I love the transparency and I love, uh, the direction of making you know, legal services more affordable and more accessible, equitable, affordable, and democratizing access to this particular asset class. You see the big smile? I'm all for democratizing access. So I will—

I was going to say, despite our differences on Bitcoin, I hope to be invited again and we can engage in spirited debate on the relative value of, of, uh, tokens versus coins.

Well, uh, I look forward to it. In the meantime, where can I send people to find you, Ron Lessor?

La Source. Uh, well, let's just say this: I'll be easy to find when I issue the token, but I have to lay the groundwork first. Right, first the MSO, then the ABS, and then the, the token.

Sounds good. Well, we will reconnect after the next step. I appreciate your time, Ron. Thank you.

Thank you for the opportunity, Kevin. I appreciate it.