Lawsuits can be expensive and time-consuming, and many plaintiffs find themselves struggling to pay for legal fees and living expenses while waiting for their cases to be resolved. To help alleviate this financial burden, many companies offer lawsuit funding, also known as litigation financing or pre-settlement funding. In this blog post, we will explore the basics of lawsuit funding, including what it is and how it works.
What is lawsuit funding?
Lawsuit funding is a type of financing that provides cash advances to plaintiffs who are involved in a lawsuit or legal claim. The funding is intended to cover the plaintiff’s living expenses, medical bills, and legal fees while they wait for their case to be resolved. The funding is usually provided by third-party companies that specialize in this type of financing.
How does lawsuit funding work?
Lawsuit funding companies provide cash advances to plaintiffs in exchange for a portion of the settlement or judgment they receive in their case. The amount of funding that is provided is typically based on the strength of the plaintiff’s case and the potential value of the settlement or judgment.
The process of obtaining lawsuit funding begins with an application. The plaintiff must provide information about their case, including the type of case, the number of damages sought, and the expected timeline for resolution. The funding company will then review the application and determine whether to approve the funding request.
If the funding request is approved, the plaintiff will receive a cash advance that they can use to pay for their living expenses, medical bills, and legal fees. The funding company will then wait for the case to be resolved. Once the case is resolved, the plaintiff will receive their settlement or judgment. At this point, the funding company will receive a portion of the settlement or judgment to repay the cash advance and any fees associated with the funding.
What are the benefits of lawsuit funding?
One of the primary benefits of lawsuit funding is that it provides plaintiffs with the financial resources they need to continue their legal battle. Without funding, many plaintiffs would be unable to pay legal fees and living expenses while waiting for their cases to be resolved.
Another benefit of lawsuit funding is that it is non-recourse. This means that if the plaintiff does not win their case, they are not required to repay the cash advance. The funding company assumes the risk of the case, and the plaintiff is only responsible for repaying the advance if they win their case.
Lawsuit funding can help level the playing field between plaintiffs and defendants. Defendants are often large corporations with significant financial resources. By providing funding to plaintiffs, lawsuit funding companies can help ensure that plaintiffs have the resources they need to compete with these defendants.
What are the drawbacks of lawsuit funding?
One of the main drawbacks of lawsuit funding is the cost. Lawsuit funding companies charge fees for their services, and these fees can be significant. Additionally, the interest rates on lawsuit funding can be high, which means that plaintiffs may end up owing more than they receive in their settlement or judgment.
Another potential drawback of lawsuit funding is that it can be addictive. Once a plaintiff receives a cash advance, they may become dependent on this source of funding and may be tempted to use it in the future. This can create a cycle of debt that is difficult to break.
If you have decided that lawsuit funding is the right option for you, it is important to choose the right company to work with. Here are some factors to consider when selecting a lawsuit funding company:
- Reputation: Research the company’s reputation by reading reviews and checking with the Better Business Bureau. Look for a company with a good track record of providing reliable and ethical funding.
- Fees and interest rates: Compare the fees and interest rates of different lawsuit funding companies to ensure that you are getting a fair deal. Be wary of companies that charge exorbitant fees or high-interest rates.
- Experience: Look for a lawsuit funding company that has experience working with cases similar to yours. A company that specializes in your type of case may be better equipped to understand the unique challenges and complexities involved.
- Customer service: Choose a company with responsive and helpful customer service. You want to work with a company that will be available to answer your questions and provide support throughout the funding process.
It is also worth noting that lawsuit funding is not available in all types of cases. Some funding companies may only work with certain types of cases, such as personal injury or medical malpractice. Before applying for lawsuit funding, make sure that the funding company you are considering works with cases similar to yours.
It is also important to understand that lawsuit funding is not a loan. Unlike a loan, lawsuit funding is non-recourse, which means that you are not required to repay the cash advance if you do not win your case. This can be an attractive option for plaintiffs who are concerned about taking on additional debt.
It is important to note that lawsuit funding can be expensive. Funding companies charge fees and interest rates for their services, and these can add up over time. Before accepting a cash advance, make sure that you understand the costs and fees associated with the funding. You should also work with an attorney to ensure that the funding agreement is fair and reasonable.
It is important to be cautious when choosing a lawsuit funding company. Unfortunately, there are some unscrupulous companies that prey on vulnerable plaintiffs. These companies may charge exorbitant fees or offer unfair terms. Before working with a lawsuit funding company, make sure that you do your research and choose a reputable, ethical provider.
Lawsuit funding can be a valuable resource for plaintiffs who are struggling to pay for living expenses, medical bills, and legal fees while pursuing legal action. However, it is important to carefully consider the costs and potential drawbacks of lawsuit funding before pursuing this option. By doing your research, understanding the terms of the funding agreement, and working with a reputable provider, you can make an informed decision about whether lawsuit funding is right for you.
Fast Funds can help with lawsuit funding in the following ways:
- Pre-Settlement Funding: Fast Funds provides pre-settlement funding, which is a type of lawsuit funding that provides cash advances to plaintiffs who are waiting for their case to settle. This type of funding can help plaintiffs cover their expenses while they wait for their case to resolve.
- Post-Settlement Funding: Fast Funds also provides post-settlement funding, which is a type of funding that provides cash advances to plaintiffs who have already won their case but are waiting for their settlement check to arrive. This type of funding can help plaintiffs cover their expenses in the interim.
- Non-Recourse Funding: Fast Funds provides non-recourse funding, which means that if the plaintiff does not win their case or settle, they do not have to pay back the cash advance. This type of funding reduces the financial risk for plaintiffs.
- Fast Application Process: Fast Funds provides a fast application process, which can take as little as 24-48 hours to complete. This can help plaintiffs get the funding they need quickly and without a lot of paperwork.
Fast Funds can help plaintiffs get the cash they need to cover their expenses while they wait for their case to resolve. We offer a fast and easy application process, and our non-recourse funding reduces the financial risk for plaintiffs