This content is unique and provided by LawLeaf, a lawsuit funding company.
Settlement funding has become very popular over the last several years due to a diminishing economy & a rising unemployment rate. To begin understanding lawsuit settlement funding we first need to understand how it works. Lawsuit settlement funding is a cash advance against a pending or already settled lawsuit. This means you can receive a lawsuit cash advance against a case that is going through the litigation process or has already been settled or awarded by a jury or judge.
Settlement funding should never be confused as a loan. While we may refer to settlement funding as a lawsuit loan it’s not exactly a loan. Lawsuit funding is provided as a non recourse advance / loan. This means if you happen to lose a case you will not have to repay the company that provided the advance. If you were involved in a motor vehicle accident and received settlement funding, you will only be obligated to pay back the advance if you win compensation. If you end up losing the case, you owe nothing.
Settlement funding is used by plaintiffs and attorneys. We often refer to it as litigation financing when money is provided to the attorney. Settlement funding is provided through various funding sources. The most common funding source is usually a hedge fund. A hedge fund for litigation financing is created by the fund manager and set-up to loan money on a non recourse basis to attorneys and plaintiffs; typically for personal injury and commercial litigation claims. A fund will typically specialize in an area of law which their underwriters are most comfortable underwriting. It is very common that a fund will provide only one or the other.
The money typically comes from investors and approvals typically come from the underwriter of the file. An underwriter will review the claim and determine whether its fundable through the documents presented by the attorney. If the case is good a funder may be willing to loan a percentage of the expected proceeds.
For more information on settlement funding, please visit LawLeaf online.