Litigation Funding: A Financial Lifeline
Following a lawsuit can put a strain on your finances. But litigation funding can offer a
possible financial lifeline to support your case and living expenses.
If your personal funds are drained, and your case still hasn't made it to court, consider
litigation funding. It links the gap from your accident date to the settlement date. Litigation
funding can provide you with cash advances for the duration of your case.
Understanding Lawsuit Funding
Basically, litigation funding is a practice in which people who are plaintiffs in lawsuits obtain
money from a lawsuit loan company who takes a lien on the proceeds of the suit in return for
cash now. Financing is made available on a non-recourse basis. This means any money
you receive is yours to keep even if the results of the case have a negative result.
Companies usually will provide litigation funding to individuals who have a strong case. For
them, the cash advance is an investment. If you win, they obtain a portion of the monetary
award given to you by the court. Should you lose, they get nothing.
The Need for Litigation Funding
Litigation is a costly procedure. For most people with personal injury claims, a lawyer is
hired on a contingent fee basis, which means there is no attorney fee unless the case is
successful. The law firm advances cash for the cost of litigation until the case is resolved.
(For ethical reasons, lawyers can't lend cash to their clients.). Litigation funding is a viable
choice for cash-poor plaintiffs. It can help them meet their living expenses, pay for medical
care and cover other personal costs.
Working with a Funding Firm
There are an increasing number of companies offering litigation financing. Pursuing funding
from these sources is relatively straightforward. You merely contact the provider for a free
consultation. The company will follow up with your attorney, evaluate your case material and
let you know often within 48 hours if you're eligible for lawsuit funding.
When choosing a funding firm, asking questions about the practices, fees and conditions
involved.
The American Litigation Finance Association (ALFA) offers some helpful tips to assist you
locate ideal lawsuit financing:
- Deal with a company that's investing for its own portfolio. Otherwise, you could wind
up paying a great deal much more than necessary.
- Do not supply information that's not otherwise discoverable. Privileged information
ought to only be shared with your attorney, not a third party.
- Do not make multiple applications with various funding companies.
- Check with your attorney. Never sign a complex contract like a lawsuit funding
agreement without consulting with your attorney first.