For Teel Lidow, it was supposed to be a vacation, not a business trip. He went to Chile, expecting to return to New York without incident. But after taking off, he realized it would not be a normal flight. The plane landed in Ecuador for no explained reason other than equipment trouble. That was followed a day later by another delay in getting the right equipment. Then there was an unexplained landing in Texas. Three days after takeoff, Lidow and his fellow passengers – including one couple who spent the better part of their honeymoon within an airline nightmare – finally landed in New York.
In New York City, representatives of the unnamed airline were waiting with release forms, asking the passengers to refrain from discussing the incident in exchange for flight vouchers.
“I'm a lawyer, and I looked at that and I'm like, ‘no,’” Lidow said. “I'm used to reading contracts and sending stuff into court systems. It was sort of a shocking experience, because even though I'm a lawyer, I'm used to kind of being pushed over by big companies – but this was the first time I'd actually gone through the effort to officially stand up to something. And I saw how powerful it could be to decide that you're not going to sit on the phone with customer service and ask them to do the right thing. You also have the option to go out into the legal system and figure out how to get some leverage, and actually compel them to treat you like a human being.”
From the botched trip came the idea for a startup called Radvocate, born in 2017. The company put a digital spin on what would normally be called arbitration, but Lidow (now the firm’s CEO) has become part advocate and part businessman. He has built a business that stands up for the little guy, regardless of the type of complaint or amount of the claim. The business model enables consumers to come to the table with a legitimate legal process, without hiring a private lawyer. It also enables companies to deal with these complaints through a reliable legal process without engaging a high-powered and expensive corporate legal team.
Radvocate was achieving its goals, albeit at a small scale. This week, however, it announced a $3 million seed round. Coinciding with this infusion, the company is rebranding as FairShake, and launching a rebuilt product and new services to achieve the next level of scale. Its new business model doesn’t charge upfront, but gets a 20 percent commission if it is successful in securing a settlement. Most cases take four to eight weeks.
Here’s how it works: Users fill out an online application and specify the case. FairShake notifies the company about the complaint and sets a deadline for a settlement. If it’s not met, FairShake files an arbitration with the American Arbitration Association (and, in some cases, covers the $200 filing fee). After the AAA takes action, FairShake facilitates negotiations and potential settlement terms.
So far, FairShake has handled more than 10,000 cases and recovered over $1 million in compensation from companies like AT&T, Comcast and DirecTV. Lidow says 80 percent of claims get a response; about 65 percent result in a settlement.
“The big companies use the complexity of the financial system and the legal system to frequently get an edge over consumers,” noted Lidow. “We want to level that out. On one side, we’re embracing this big social issue, which is that companies have spent a lot of time and money creating this legal system that's really built for them. We’re now trying to make it work for consumers – that was the main social mission for us.”
There is technology involved as well. Part of the $3 million funding will go toward sharpening the algorithm that determines whether or not a complaint is viable. This depends on the type of complaint, the success rate of similar cases, the amount being asked and the company in question. The web form is also built to inform this algorithm. After the case is given the green light, FairShake turns to a human-centered process.
Another purpose for the seed funding is marketing. How do you get the word out to a very specific audience with a very specific need? For the short term, Lidow is focused on earned media, PR and finding a way to get the overall FairShake experience in front of people who may need it. He claims that 76 million people have a dispute with a big company every year, and an overwhelming percentage fails to get any attention or settlement.
“In most situations, the company's not happy about a dispute because they've gone through all this effort and cost to make a lawyer happy and not retain a relationship with the customer,” Lidow pointed out. “Maybe there was a solution that would be better for the consumer. Maybe there’s a better process that could have been faster and easier. We have proprietary data that can help to resolve cases. We have a large knowledge base that traces the consumer journey. With that knowledge, we can help both parties understand each other and reach a settlement.”