Lawsuit Funding Becomes an Option

Content provided by LawLeaf

Lawsuit funding in recent years has become much more popular for plaintiffs looking to extend their cases in hopes for larger payouts. Due to the downturn in the economy and recent job loss, litigation financing companies are becoming increasingly popular within the legal industry. People that tend to use lawsuit funding as an option are those people who are strapped for cash and need money to help pay for bills while their case is reaching a settlement.

Just over the last few years the amount of clients that are seeking pre settlement funding have almost trippled. Many people believe this is directly related to hard times and as the economy worsens these numbers are likely to increase. While this type of funding is often frowned upon, plaintiffs and many attorneys see it as a way to help extend a case. Due to the deep pockets of large companies and corporations, litigation can extend out for years before a settlement is reached. These companies oftentimes have tenacious defense attorneys with deep pockets willing to hold up a verdict at all costs. Most companies believe the longer you hold up a case in court, the likelihood increases that the plaintiff will settle for less money.

When a company provides funding for a legal case the money is not loaned. Lawsuit funding is a financial arrangement between the lender and the plaintiff. A loan is money that is borrowed by a consumer with the understanding the money borrowed will be paid back within a certain time period. Lawsuit funding is non recourse. This means money borrowed by the plaintiff with the understanding if the plaintiff wins the case, they will repay the funding company along with a percentage agreed upon prior. If the plaintiff loses the case the money will never be repaid. This is a risk that an investment company takes when offering lawsuit funding.If

When a person decides to hire a personal injury lawyer to help fight for their compensation they have an arrangement to pay the attorney a contingent fee. This fee is typically a percentage of the winnings. If the plaintiff wins the case, the attorney will be the first person to receive compensation. The attorney will take a percentage of the earnings agreed upon prior to representing a client and the client will receive the rest of the money. The monies can be paid in one lump sum or through a structured settlement (payment plan). If a plaintiff decides to use lawsuit funding as an alternative the attorney will receive their portion of the proceeds before a litigation finance company will receive their payment.

If a plaintiff is successful in winning their case however the amount of money won by the plaintiff is less than what was borrowed, the finance company will receive the remaining amount of money, only after the attorney is paid his fee. The remainder balance is not paid back to the litigation finance company.

There are typically four types of funding a litigation financing company will offer however not all companies offer each of these types:

  • Pre settlement funding
  • Structured settlement funding
  • Commercial litigation financing
  • Law Firm loans

While alternative methods are preferred by some lawsuit funding has become a viable option for many.

If you are currently searching for additional information on lawsuit funding visit LawLeaf today. LawLeaf is an online lawsuit funding company providing services throughout the United States and Canada.

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2 Responses

  1. […] unknown wrote an interesting post today onLawsuit Funding Becomes an Option « LAW INFORMATIONHere’s a quick excerptIf a plaintiff decides to use lawsuit funding as an alternative the attorney will receive their portion of the proceeds before a litigation finance company will receive their payment. If a plaintiff is successful in winning their case … […]

  2. Very good blog you have here but I was curiouus about if you knew of any user discussion forims that cover the same topics talked about in this article?

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