If you’re presently embroiled in a lawsuit, you may have stumbled upon terms like “lawsuit loans” or “pre-settlement funding” as you navigate the litigation process. While it goes by many names, the correct term is legal funding, and if you’re here, you obviously have some questions about it. So, settle in, because class is now in session! Welcome to LEGAL FUNDING 101.
WHAT IS LEGAL FUNDING?
In short, legal funding is a cash advance against a portion of the settlement you hope to receive once your court case has concluded.
Here’s the longer version: When you’re a plaintiff in a lawsuit, the legal process can be long and unpredictable. It could be months—sometimes even years—before your case ever sees the inside of a courtroom, much less comes to a favorable conclusion. During that time, you may be out of work due to a personal injury, and with a lessened salary, it’s not easy to keep up with your medical bills, legal fees, and household expenses. Legal Funding is a great resource to help bridge the gap until your case settles.
WHAT KIND OF CASES QUALIFY FOR LEGAL FUNDING?
Almost any type of lawsuit is eligible for legal funding. Legal Bay has been at this for a long time, and they’ve offered presettlement cash advances to plaintiffs in lots of different types of lawsuits from personal injury, slip and falls, premise liability motor vehicle accidents, construction accidents, medical malpractice, police brutality, unlawful incarceration, sexual harassment or abuse, wrongful termination, racial or age discrimination, dog bites, and beyond. They also handle settlement loans for commercial litigation such as mass tort, judgment or verdict on appeal, contract dispute, Qui-tam or whistleblower cases, False Claims Act, patent litigation, copyright infringement, and more.
Basically, as long as your case has merit, it can qualify for legal funding. Merit is based on the following:
Liability – Who wronged the plaintiff?
Damages – How much harm was caused?
Insurance – Does the defendant have the financial means to compensate the plaintiff?
WHAT COULD I DO WITH THE MONEY?
Pretty much anything, really. Most people take advantage of legal funding to help pay their rent or mortgage, take care of day-to-day living expenses, college tuition, legal fees, medical bills, groceries, credit cards, you name it. But every person has their own unique situation, and you may want to use it to help offset the price of that new car or take the kids on that vacation you promised them years ago.
Legal funding can be a viable resource for plaintiffs struggling to make ends meet, but it can also allow you to live your life while your lawsuit is stuck in limbo. Lawsuit loans have been an invaluable financial solution for both lawyers and plaintiffs alike.
OKAY, BUT THERE MUST BE A CATCH, RIGHT? HOW MUCH WILL LEGAL FUNDING REALLY COST ME?
Some unscrupulous pre-settlement funders will charge high compounding rates and broker fees. Payback rates can range from 2.5% per month to 3.99% per month in compounding interest. Most contracts have rates ranging from 30% to 60% annually, and there are also different types of contracts that charge more than 200% of the amount funded. Every funding company is different. The main thing to avoid is compounding “interest” contracts which can drastically increase as your case drags through courts.
Some legal funding companies may seem affordable in the beginning, but with escalating compound interest, you may soon find that you owe the lenders so much that it cancels out your lawsuit settlement. You’ll want to make sure you’re dealing with a reputable funding firm so that you don’t get hit with unexpected charges.
With Legal Bay, there are no out-of-pocket expenses or any upfront monthly payments paid by you throughout the entire process. Legal Bay never charges compounding interest and has some of the most competitive flat rates in the industry. Our contracts are clear and upfront with no surprise fees, and that’s just one of the many reasons why we’re ranked among the best lawsuit loan companies in the country.
SOUNDS GOOD. HOW CAN I OBTAIN LEGAL FUNDING?
Well, the first thing you’ll want to do is speak to your lawyer to see if he or she has any recommendations for a reputable funding company. If not, a simple internet search is an easy way to get started, but since you’re already here, we’re guessing you’ve already taken that step. You may have looked up terms like “presettlement lawsuit funding” or “settlement loan” or “loan on lawsuit” during your search, but hey, aren’t you smarter already because you now know the correct term for a “lawsuit loan” is actually legal funding!
You’ll want to narrow down your list of funding companies by state, and maybe by case type.
No matter which funding company you choose, the most important thing you can do is ensure that you’re dealing with a direct funder and not a broker. You’ll pay more with brokers because they’re simply middlemen who are only there to pass your case along to an actual funder while charging you to do so. Most reputable funding companies want you to get a fair deal; those are the ones you want to work with.
The approval process is pretty straightforward and easier than you might think. The first step will be to fill out a preliminary application with the legal funding company. Generally, the information they are looking for will be your basic contact information, the type of case you’re litigating, and the name and phone number of your attorney.
The funding company will then contact your attorney to request any legal documents that can assist them in evaluating your case in order to assess the merits of your claim.
Once the lawsuit funding company determines there is merit to your case, you will very likely be approved! You can expect a cash advance within days.
ASIDE FROM CASH IN MY POCKET, ARE THERE ANY OTHER BENEFITS TO LEGAL FUNDING I SHOULD KNOW ABOUT?
When plaintiffs stand to gain significant settlements, the defendants may drag a case out in hopes that the plaintiff will settle for less. But how long can the average person be expected to wait? Especially if they’re out of work or dealing with medical issues that make them unable to get a new job. This is what defendants with deep pockets count on, that the plaintiff will cave to a lowball offer out of desperation.
Nothing is more disappointing to an attorney than watching a client being forced to accept an early settlement because they can’t afford to let the legal process run its full course. Legal funding gives attorneys the time they need to fight for a much larger offer down the line. In some cases, being able to hold out for the larger settlement allows legal funding to pay for itself!
ANYTHING ELSE I SHOULD KNOW?
Plaintiffs dealing with financial stress don’t have the luxury of time to wait out a lengthy legal process, but legal funding takes that anxiety away so that plaintiffs can make better decisions in regard to their court case. Plaintiffs no longer have to accept a lowball settlement offer simply because they can’t afford to wait any longer. They can rest easy knowing their bills are being paid and their family is being taken care of, all with the knowledge that an even larger windfall of money is coming their way at some point in the future once their case finally resolves.
Plaintiffs have been awarded cash advances for lawsuits of every kind. A good legal funding company will find a way to get you the money you deserve, most times within days. It’s a great way to give yourself a head start on rebuilding your life.
Bottom line? The financial freedom legal funding provides is helpful, but the mental relief it offers is invaluable.
We’d love to speak with you and answer any questions you may have. Please feel free to contact us for more information on how you can obtain legal funding.
