Settlement funding, also known as lawsuit loans or litigation financing, provides plaintiffs with much-needed financial support during the often lengthy litigation process. This type of funding can be crucial for individuals facing mounting medical bills, living expenses, and other financial burdens while awaiting their settlement.

This blog explores what settlement funding is and the key factors that funding companies consider when evaluating a case for funding.

What is Settlement Funding?

Settlement funding is a financial service that offers plaintiffs a cash advance against their anticipated settlement or court award. This funding is non-recourse, meaning that if the plaintiff does not win the case or receive a settlement, they are not obligated to repay the advance.

Settlement funding companies assess the merits of a case and provide funds to plaintiffs, which can be used to cover various expenses during the litigation process.

The primary benefit of settlement funding is that it provides immediate financial relief, allowing plaintiffs to focus on their recovery and legal battle without the added stress of financial strain. This can help plaintiffs avoid settling for less than they deserve due to financial pressures.

Key Factors Settlement Funding Companies Consider

Settlement funding companies carefully evaluate several factors before approving a case for funding. Understanding these factors can help plaintiffs and their attorneys prepare for the application process.

Case Merits and Liability

The strength of the case and the clarity of liability are crucial factors for funding companies.

Funding companies assess whether there is a clear indication of liability and strong evidence supporting the plaintiff’s claims. They look at the facts of the case, available evidence, and any legal precedents that may apply.

A strong case with clear liability and substantial evidence is more likely to be approved for settlement funding.

Potential Settlement Amount

The potential settlement amount is a critical consideration for funding companies. Companies evaluate the estimated value of the case based on similar cases, the severity of injuries, and the potential for a high settlement or court award. They need to ensure that the anticipated settlement will cover the advance and associated fees.

Higher potential settlement amounts increase the likelihood of receiving funding, as they offer a better chance of repayment.

Duration of the Case

The expected duration of the case can impact a funding company’s decision. Funding companies prefer cases that are closer to resolution, as shorter timelines reduce the risk and uncertainty. They assess the stage of litigation and any upcoming court dates to determine how long it might take to settle the case.

Cases that are nearing settlement or trial are more attractive to funding companies due to the reduced timeline and risk.

Plaintiff’s Financial Need

The plaintiff’s financial need and ability to manage without funding are also considered. Companies evaluate the plaintiff’s financial situation, including their current income, expenses, and any financial hardships resulting from the litigation. This assessment helps determine the urgency and necessity of the funding.

Demonstrating significant financial need can increase the likelihood of approval, as it highlights the immediate benefit of the funding.

Attorney’s Cooperation and Support

The cooperation and support of the plaintiff’s attorney are vital in the funding process. Funding companies often require the attorney’s input and documentation to assess the case accurately. An attorney’s willingness to cooperate and provide necessary information can facilitate the approval process.

Having an attorney who is supportive and cooperative with the funding process can significantly enhance the chances of receiving settlement funding.

Conclusion

Settlement funding provides crucial financial support for plaintiffs navigating the lengthy and complex litigation process. By offering financial stability, strengthening negotiation positions, and enabling better case preparation, settlement funding can significantly impact the outcome of a case.

Funding companies consider several key factors, including the merits of the case, potential settlement amount, case duration, plaintiff’s financial need, and attorney’s cooperation.

Understanding these factors can help plaintiffs and their attorneys successfully navigate the settlement funding process and secure the financial assistance needed to pursue a fair and just resolution.

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