Pre-settlement legal funding is a fairly new option for plaintiffs and attorneys involved in lawsuits. And it comes as a welcome relief in a time when even the most straightforward lawsuit can cost upwards of $10,000. The cost of a lawsuit alone can make the legal system seem to be working better for individuals with financial means to afford litigation. But what happens with people equally deserving but with fewer resources?
If you are considering a lawsuit, there are many aspects to keep in mind besides the attorney fees. The cost of filing papers with the Court alone can range between $100 and $500 depending on your circumstances. If you factor in serving the other party through a professional process server, hiring an expert witness, and processing charges for medical records and travel costs, the total cost of a lawsuit gets many potential plaintiffs to give up.
This is where pre-settlement legal funding can come in handy and ensure justice regardless of the financial situation of everyone involved. While there are many terms used almost interchangeably, such as lawsuit settlement funding, third-party financing, post-settlement funding, litigation funding, presettlement financing, and litigation finance, they refer to the same thing. So, what exactly is pre-settlement legal funding?
Pre-settlement legal funding is not a loan
Pre-settlement funding is a way for plaintiffs and attorneys to finance litigation, as well as other legal expenses, through a third-party funding company. While it may sound like a fancy name for a loan, there are crucial differences. First, there is no obligation for the funded client to repay the litigation funder unless they win their case. It is a re-course transaction, which means the funder cannot pursue the client’s assets that are not related to the lawsuit.
Why banks are not always the best option
Bank loans and credit lines may appear like a cheaper option than even the best pre-settlement funding when it comes to cash for lawsuits. Why is that? Unlike legal funding, bank loans usually require non-liquid assets as collateral in order to recoup their investment. Funding companies are not always able to recoup their investment, which is why the cost can appear more significant.
In addition to having to repay them, bank loans are not always practical or accessible. Legal funding, on the other hand, is a lawsuit cash advance. You and the law firm representing you are not obligated to repay if you lose your case. Just as importantly, the funder will not pursue your assets that are not related to the litigation to gain satisfaction, which a bank will do.
A smarter way to fund your success
Pre-settlement legal funding is a fail-proof lawsuit funding option both for the client and the attorney representing them. If you’re a plaintiff, it provides you with the money while you wait for the settlement without risking any collateral. Second, if you are an attorney, it enables you to receive your contingency fee.
To find out more about our pre-settlement legal funding program contact us at: (800) 922-7439