You might think that having your conviction reversed after years of protesting your innocence, filing dozens of court documents, and suffering numerous adverse decisions, would signal a rosy start to a new and wondrous life. You might also think that the state whose authorities are responsible for your wrongful conviction would be eager to provide you with reparations to help you get your life back on track. In a perfect world, maybe, but this is not a perfect world.

Fighting for Freedom – for What?

Derrick Hamilton experienced the shortcomings of law enforcement, the courts, and the penal system firsthand. Like almost 2,800 others who were exonerated since 1989, he spent a significant portion of his life in prison for a crime he did not commit. For 23 years, he challenged his conviction claiming that the police in New York City and New Haven, Connecticut, fabricated evidence. After years of painstaking study and court actions, Hamilton finally succeeded in overturning his conviction.

But, that did not signal the end of Hamilton’s challenges. No state or federal authority waits at the door to the prison with a giant check and an apology. Although finally a free man at 50, he found himself starting his new life from scratch, in a worse position than young men and women half his age.

Exonerees are often middle-aged or older, having spent behind bars what might otherwise have been some of their most productive years. Often without the benefit of an education, an opportunity to grow a business, or progress in a career, they emerge from prison with minimal personal resources. No money to buy decent clothes for job interviews, no phone for queries, no internet service to submit job applications. Even their friends and relatives are often older themselves, and many have used their own money fighting to free their incarcerated loved one.

Starting Over

Exonerees start over with little more than the clothes on their backs, maybe a few dollars in “gate money,” and if necessary, a bus ticket to the county that convicted them. Many don’t even have social security cards or driver’s licenses. If they can wait for it, they do often have one powerful but unliquidated asset: compensation for their wrongful conviction and imprisonment.

An exoneree can be compensated in two ways for a wrongful conviction and time spent in prison. One is by filing a claim with a state-sponsored compensation program. These programs are at least ostensibly designed to offer the exoneree a sum for each year spent in prison, usually between $50,000 and $58,000. They may also include additional perks like paid health insurance and college tuition.

Only 35 states have any formal compensation program in place. In the others, the exoneree must seek redress through a private bill shepherded through a legislative body.

The exoneree also can file either or both a lawsuit under state tort law or a lawsuit claiming that the state or municipal authorities violated the exoneree’s civil rights.

Information garnered from the files of the National Registry of Exonerations shows that those who were wrongfully incarcerated stand to gain significantly more from filing a lawsuit than from relying on a state compensation program. But, the outcome of a case is more uncertain than the success of a claim against a compensation program.

Innocent or Not Guilty?

Those claims and lawsuit awards are not slam dunks. Often, before qualifying for anything, the exoneree has to be able to show not only that the conviction was wrongful but that the exoneree was innocent of the charges brought.

As any first-year law student learns, there’s a vast gulf between innocence and acquittal. When the accused is acquitted, the state was unable to prove guilt beyond a reasonable doubt even though he may have done the deed. To tap into a compensation fund or win an award in court, many exonerees must go beyond a court’s decision to overturn a conviction and prove to the satisfaction of the state compensation authorities that there are virtually no circumstances that could have led to the conviction but for the state’s action. Each state’s standard is slightly different.

Great Expectations

According to the National Registry of Exonerations, the average state compensation claim is $70,000 per year. Still, typically, the exoneree only receives compensation for just over half of the years spent in incarceration. For those who filed either a state tort or a federal civil rights lawsuit, 55% received some money, 27% were unsuccessful, and the remaining cases are pending. The average lawsuit award for each year of imprisonment was just under $305,000. But exonerees received compensation in these suits for only 32% of the total years they lost in prison.

From these statistics, it’s easy to see that the process of filing a compensation claim or filing a lawsuit is daunting and unlikely to provide any meaningful compensation for the exoneree for months and, in many cases, years after release from prison. As a result, the exoneree will often remain dependent on family or friends for necessities like food and shelter. Or, it may force the exoneree to depend on prison re-entry programs or public assistance.

The White Knight: Litigation Funding

Recently exonerated and released people experience circumstances similar to tort plaintiffs, who are often out of work or underemployed after a vehicle accident or botched operation. Plaintiffs use litigation funding to meet financial needs in all kinds of personal injury actions while their cases wind through the system. Facing months of uncertainty, exonerees are also turning to litigation loans for the financial resources they need to begin rebuilding their lives while they wait for their compensation claims to resolve.

There are no standard terms for these pre-settlement agreements. Some funders agree to disburse a lump sum payment representing a percentage of the settlement the exoneree expects to receive. Some funding companies may also consider supporting the exoneree with a monthly advance.

The Litigation Funder’s Risk of Loss

When taking a litigation funding advance, exonerees find protection against the risk of loss especially attractive. Litigation funding is not a loan. It is an advance against a future award. Almost all of these transactions are non-recourse, meaning that the litigation funding company can only seek repayment from the award, not from the exoneree personally. Therefore, if the exoneree loses the lawsuit, the exoneree is not obligated to repay any advances.

Because of this risk of loss, considering the statistics that show the exoneree’s chance of prevailing in the lawsuit, the litigation funder carefully evaluates such factors as

• whether the exoneree was incarcerated and for how long
• circumstances of the arrest
• details of the conviction, charges brought, verdicts
• substance of the exoneration
• damages suffered
• anticipated length of the civil lawsuit
• expected compensation

Litigation Funding is Not Like Other Loans

Exonerees find litigation funding pragmatic for another reason. Many, if not most, won’t qualify for traditional loans. Not so with litigation funding. The litigation funder is not loaning money. Instead, it advances against the exoneree’s own asset. If the litigation funder chooses to advance funds, it is because its underwriters deem the risk acceptable.

Simply, the litigation funder is more than not likely to get its money back eventually. Consequently, there is very little utility in the litigation funder asking for a credit check, proof of employment, a minimum income, a permanent address, a co-signer, or a car title. Any one of the requirements imposed by a bank or a finance company can stop an exoneree in his tracks.

Derrick’s Story

Derrick Hamilton is an excellent example illustrating how litigation funding can help an exoneree get his life back.

Hamilton, who spent 22 years in prisons in New York before his exoneration, used his pre-settlement advance while he pursued state and federal lawsuits. By his own account, litigation funding had an extremely positive impact on his life.

Hamilton says, “When released from prison, you are thrown into poverty. You have nothing, not a penny. Legal funding alleviated my desperation.”

Litigation funding did more than alleviate Hamilton’s desperation. He used the advance to finance his investment in a restaurant in his native New York City. Hamilton’s business partner in the restaurant was also an exoneree, and they hired other exonerees to work in the business. “It becomes a public safety issue because people are desperate when they come out of prison. You don’t want people to leave prison and be desperate because they don’t have the options. With legal funding, we are given options,” says Hamilton. “If it wasn’t for the loan they would still be sleeping on mattresses on the street.”

Litigation funding directly benefited Hamilton in another way. It allowed him to take his time settling his lawsuit. He explains, “Most guys settle because they need the money now. Lawsuit pre-settlement advances level the playing field.”

Hamilton ultimately settled his civil rights lawsuit against New Haven and New York City for $7 million. He received $3.75 million from his compensation claim filed in the New York Court of Claims.

Hamilton, who spent many years as a “jailhouse lawyer,” is now a paralegal specializing in post-conviction relief and advocates on inmate issues. You can read more of his amazing story and the experiences of hundreds of other exonerees on the National Registry of Exonerations website.