The Right Time for Lawsuit Funding?

Lawsuit funding typically takes the form of a non-recourse cash advance. This means that the money advanced must be repaid only if your case is resolved in your favor. If you sustain a serious accidental personal injury under circumstances where the accident was someone else’s fault, you should be able to locate a lawsuit funding company willing to provide funding contingent upon the result of your lawsuit.

These types of advances are not without risk. Therefore, most diligent companies will need to obtain information from your attorney before they can approve an advance. They will assess your claim or lawsuit, evaluate potential liability and damages, and determine whether the lawsuit funding you seek is an appropriate fit against the expected case value.

The process of obtaining this type of funding has become much easier since I introduced Lawsuit Financial Corporation, almost 11 years ago. Close and effective communication between your lawyer and the funding company is essential to producing the information necessary to complete the transaction. The process could begin with a simple phone call or an on line application to the appropriate funding company. More appropriately, however, the process should begin after you have retained an attorney and after a lawsuit has been commenced. If injuries received from the accident have rendered you unable to earn a living or have resulted in a limitation of earnings, you should discuss, with your attorney, whether lawsuit funding is an appropriate method for resolving some or all of your financial difficulties. Often, your attorney will have developed a relationship with one or more lawsuit funding companies and will prefer to provide a referral to one that he/she is comfortable with.

If a cash advance is made to you, the plaintiff (the person pursuing legal action), it is contingent on the outcome of the litigation; there is no repayment obligation if you lose the case. Thus, liability and damages are crucial to making a determination as to whether or how large a cash advance can be made. The cost of the funding must also take liability and damages into consideration, as these types of transactions are substantially governed by a calculation of the risk involved. Since these types of transactions tend to be on the pricey side (because of the risk of loss), you should you should first consider other alternatives. Can you borrow from the bank, a home equity loan for instance (be careful, if you lose your case, you may lose your home)? Will friends or family provide you with the financial assistance you seek (again, be careful, losing the case may result in losing the relationship)? If no other avenues are available and you must pursue lawsuit funding, pursue only that amount which is covers absolute necessity. Price usually increases with time, so it is sensible to seek multiple small advances, over time, than to seek a large lump sum advance at the beginning.

Any good attorney will tell that it may take months, even years, to resolve your personal injury lawsuit. If your injuries prevent you from working, how long can you survive without earning a living? Your bills and expenses will not stop because you have been injured in an accident. Thus, lawsuit funding will provide the ability to pay the bills, maybe maintain your good credit, and wait out the lengthy legal process. This type of funding may even increase the value of your case, because it will lessen the pressure you feel to settle the case early, to pay necessary expenses. An early settlement is usually an inadequate one; ask your attorney. A desperate plaintiff is not a positive influence upon settlement negotiations.

Lawsuit funding should be considered and chosen very carefully. Consider the company’s experience level; are they brokers or principals? How long have they been in business? Are they operated by financial people or by attorneys? Because, as previously mentioned, litigation can sometimes take months, even years to resolve, consider a company that provides capped funding and/or will compromise funding profits if the case resolves for a inadequate amount. Careful consideration and strategic use of this financial tool can and often does result in a substantial increase in the results of your case. Good luck in your pursuit of justice.