FairClaims raises $1.8 million to be a virtual ‘Judge Judy’

Two years ago, Stephen Kane was looking for his next big idea. A lawyer who previously worked for the mega-firm O’Melveny & Myers and then spent time at Lex Machina, a software company that analyzed case law for lawyers, Kane was looking for the next new thing.

That was when he hit on his latest idea, FairClaims — an online service to resolve small claims cases. Kane calls it a virtual “Judge Judy” — and he’s not wrong.

Small claims cases require an appearance in court and can be incredibly time-consuming, and the Los Angeles-based FairClaims is offering an alternative.

For a nominally larger fee than a typical small claims filing ($79 versus $75 — depending on the state), individuals can pay to have their claims mediated by a professional mediator or file for summary judgement in front of an arbitrator. Businesses pay $250 per claim to have their cases heard.

It’s not just for individuals, though. Companies like Airbnb and others are turning to these kinds of virtual hearings as a way to deal with disputes between guests and hosts.

According to Kane, the service is becoming the go-to for companies engaged in the sharing economy.

“Turo has us in their terms,” says the company founder.

The company typically settles between 10 percent and 20 percent of its claims without the need to go to an arbitrator (basically a judge who will settle disputes after hearing evidence). And cases typically take no more than three weeks to adjudicate (claims filed in court can take months before the overtaxed system can even schedule the case for a hearing).

All of the arguments regarding a case are made either online or through phone calls with the mediator or arbitrator and the claimants and defendants.

To finance the company’s expansion (including sales and marketing efforts), FairClaims has raised $1.8 million in a convertible note from some big-named Los Angeles investors.

Greycroft, Crosslink and the newly formed investment fund Fika all contributed to the round, according to Kane.

For Kane, the financing will help the company bring its message of better access to legal services to the masses.

“The mission is really about access to the justice system,” says Kane.