Have you ever heard plaintiffs seeking lawsuit funding from companies to finance their court case? Yes, right? Unfortunately, there isn’t much coverage on this industry by the mass media that has often led the public being misinformed, keeping space for companies to take benefit of unsuspecting plaintiffs and their lawyers. This article aims to fill those gaps and make people acquainted with the various facts of litigation funding.
Often, numerous litigation cases are seen, that are settled faster with acceptance of unworthy amount because the plaintiff runs out of money and cannot afford to continue with the court case. This mostly happens with auto accidents lawsuits. Plenty of auto accident lawsuits are filed daily in the court and are settled out of the court at much lesser compensation. For victims of auto accidents, misfortune becomes the only lifeline. They suffer immense pain, financial pressures, loss of work, etc., and also couldn’t afford to seek the compensation for all the losses rightly.
To help these people out, many companies have come up with pre-settlement auto accident loans that help the plaintiff with the cash amount that they need to continue with the case. If you are an uninformed plaintiff, then you might have plenty of questions in your mind. Here in this guide, all those questions will be aimed to get answered.
Lawsuit Funding – What Is It?
Lawsuit funding is a cash flow option available to plaintiffs involved in the litigation. It is a cash advance funding process that is specifically for plaintiffs and attorneys who are paid on a contingency fee basis, where both parties receive financing against their anticipated award or legal fee. A plaintiff’s cash advance is based on their award from a successful settlement, while a plaintiff’s financing is based on their contingency fee that is usually between 30% and 40% of the award the plaintiff they are representing wins.
This is how Wikipedia defines lawsuit funding:
“Lawsuit funding is a process through which litigants (and even law firms) can finance their litigation or other legal costs through a third-party funding company. These third party funding companies provide cash advances to litigants in exchange for a percentage share of the judgment or settlement. However, if the case proceeds to trial and the litigants loses, the third-party funding company receives nothing and loses the money they have invested in the case. In other words, if the litigant loses, he does not have to repay the money. Accordingly, to qualify for funding with a legal financing company, a plaintiff’s case must have sufficient merits.”
In the above statement or definition,”third-party funding company” refers to the legal finance firm that advances funds to the plaintiff.
Pre-settlement auto accident loans or lawsuit funding offers the plaintiff a chance to right some of the wrongs that they have suffered while litigation is still ongoing. It doesn’t let litigation put your life on pause. For instance, a litigant can make up for lost wages, cover medical bills or pay for complex surgeries, or help cover other expenses that inevitably pile up. It can help minimize the stress associated with expensive lawsuits, allowing litigants to focus on other important issues in their lives.
The money that litigants can access through pre-settlement funding can make the difference between getting by and thriving after suffering a personal injury or losing a job.
Lawsuit Funding is a Cash Advance, Not a Loan!
This is a significant concept. Lawsuit funding is an advance and not a loan. Unlike loans, in lawsuit funding, there is no monthly payments, points, or upfront fees.
Furthermore, lawsuit funding is non-recourse. So, if the litigant loses his case or his proceeds are less than what is owned under the terms of the funding agreement, he is NOT responsible to pay the lawsuit funding company anything.
How Does Lawsuit Funding Work?
The lawsuit funding process takes place between plaintiffs and third-party litigation funders, also called legal finance companies. After a plaintiff has secured an attorney and began at least the initial stages of a lawsuit, he/she can submit an application to the funding company.
Applications for lawsuit funding work somewhat differently than applications for bank loans or lines or credit. Plaintiff cash advance loan providing companies don’t need non-liquid collateral like banks do, and they accept anticipated future settlement as sufficient collateral.
Lawsuit funding companies are repaid directly from the future settlement or judgment proceeds, and they are only repaid if there is a favorable outcome, in the form of a settlement or judgment.
Where to Get the Best Lawsuit Funding Companies?
There are many litigation funders across the US area in the recent times. But, the best lawsuit funding companies can be found in Florida. The lawsuit funding companies in Florida offer 24-hour litigation funding, offer quick response, maintain complete transparency, charge legitimate interest rates, etc.
Remember the more questions you will ask while choosing a lawsuit funding company, the better you will able to understand the process and select the right company for your litigation funding.
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