Using Plaintiff Funding Strategically

Sometimes, requests for plaintiff funding occur when an injured client needs cash for only a few months until the case settles. In other cases, however, usually involving higher injury claims, litigation can take much longer. In these situations, funding can often play a key role in the settlement process and help the injured plaintiff receive a higher payout.

Settle Now or Settle Later? A single dad is driving his two kids home from school when his car is rear-ended by a distracted truck driver. The family is seriously injured. The physical and emotional trauma will keep the dad off work for at least a year. Bills are mounting and his mortgage is past due. The truck driver’s insurance company offers an immediate $300,000 to settle the case.

After reviewing the circumstances around the accident, the plaintiff’s attorney deems the settlement amount too low and advises his client not to accept the offer. The lawyer can make that recommendation because he knows his client’s short-term financial worries can be resolved through plaintiff funding.

The injured dad follows the advice of his attorney and applies and receives three months’ worth of living expenses from a plaintiff funding company. The lawyer counters the insurance company offer with a $2.5 million demand. Both parties eventually settle for $1.5 million. The attorney receives his fee and the funding company is paid. The injured client still clears about $500,000–or approximately $400k more than he would have received with the initial offer.

Lifting the Pressure. If plaintiff funding was not considered in this case, the client would have been pressured to accept the original lowball offer just to pay his bills. With plaintiff funding, the client’s financial emergency is resolved and the attorney has the time to negotiate the best settlement for his client.

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