9 Legal Funding Things To Know in 2019
You find yourself caught up in a lawsuit process. In times like this, we all think twice before making big, important decisions. We all run and rerun all possible options, all pros and cons, time limits and rates that might be essential for the lawsuit process.
Your ongoing plaintiff process should not stop your everyday living, your way of life or your future plans. If you do not want to use up all of your savings or encumber your friends or a family member or furthermore risk a possible complication in getting a bank loan for a litigation process, then the best solution for you is Legal Funding.
In this article, I will present you with 10 Legal Funding Tips you must know in 2019 that will help you better navigate through the process:
1. Start Early with Legal Funding
The average lawsuit lasts about two years. To reach completion from filing to settlement in some cases takes longer than that. You can apply for legal funding if you have experienced a general personal injury, been involved in a car accident, impacted by a defective product, involved in medical malpractice and much more.
Your recuperating time will likely put you out of the work for a while and turn your life upside down. However, while your litigation is still ongoing, you, as the plaintiff can make up for your lost wages, cover your medical bills or pay for complex surgery or cover other costs. Therefore, it is a good idea to start planning your financing (legal funding) as early in the process as possible.
2. Educate Yourself Before You Start Legal Funding Procedure
Swimming into the unknown is never a pleasant feeling. In order to get the best deal in your lawsuit process, you must educate yourself as much as possible. You must know what the Legal Funding options are, what they are offering, and what is the difference between an Advance and a Legal Funding “Loan.”
Let’s start with the basic terminology that will help you better understand what is meant by Legal Funding.
When you start your educational research, you will come across different terminology for Legal Funding, including terms such as settlement loans, lawsuit loans, lawsuit financing, and lawsuit lending.
They all stand for basically the same thing: finances (advance) available to plaintiffs involved in the litigation process where they are paying their attorney on a contingency fee basis (a sum of money that an attorney receives as a fee only if one wins the case).
Similarly, a lawsuit cash advance is non-recourse, which means that you pay back to the financing company only if you win or settle the case.
This might be the most important part for future plaintiffs to understand; the difference between an Advance and Standard Loan. Lawsuit Legal funding is an Advance not a Loan!
Bank loan versus Plaintiff advance / Advance versus Legal Funding Loan
When you are involved in the personal injury litigation process and you need money quickly, the first resource you often think of is a credit card, a bank loan and line of credit. However, getting a bank loan can often be a difficult process for plaintiffs.
In order to get a loan or line of credit, a bank will often ask for hard collateral in the form of non-liquid assets such as paper investments, personal vehicles, real estate, or home equity. While some people may easily come up with such assets others can struggle to meet bank requirements.
Unlike a Loan, an Advance does not require monthly payments, nor does it require a good credit score.
The Underwriting Team, a team of legal experts, is employed by the Legal Funding Company in order to offer a variety of financing options that may be customized to fit a plaintiff’s case type, and state where the legal complaint is filed. The underwriting team determines how strong the case is and how much it will gain. They also define approximate value of the case based on numerous variables, including the outcomes of similar past lawsuits, typical insurance policies, and extent of the injuries and damages suffered by the plaintiff.
They calculate how much the Third Party Legal Funding Company can safely advance so that they can make a profit and the plaintiff still has a satisfactory settlement after the lawsuit completion. The Team also determines the discount rate that should be applied to the advance based on the overall risk assessment of the case.
Unlike bank loans, Lawsuit Advance is non-recourse (non-recourse transaction, if the plaintiff loses his case or his proceeds are less than what is owed under the terms of the funding agreement, he is not responsible to pay the funding company anything).
Types of Legal Funding available to plaintiffs
Another significant aspect of your Legal Funding research is your knowledge about the Legal Funding Types that are available to plaintiffs:
Pre-Settlement Legal Funding
Post-Settlement Legal Funding
Pre-Settlement Legal Funding
As we mentioned at the beginning of this article, starting early is very important, and if you have the chance to plan your Legal Funding action early, you will be interested in Pre-Settlement Legal Funding.
Pre-Settlement Legal Funding is available to plaintiffs who are currently in a litigation process where a settlement has not been reached yet. This type of Legal Funding is the most common as well as the most popular of many specific kinds of legal funding types in general.
Putting your life on hold is never an option and ongoing litigation can impact your life no matter how well you are prepared. During the litigation process, you will still need money to get through your everyday life.
Pre-Settlement Lawsuit Legal Funding is more risky to Funding Companies because they are not sure whether a settlement will be reached, how lengthy it might be or the eventual amount that will be paid off. Thus, a Pre-Settlement Advance is more expensive than Post-Settlement Legal Funding.
Post-Settlement Legal Funding
Post-Settlement Legal Funding is available to plaintiffs whose litigation has been concluded but there is a holdup in payout of their award (delays might differ from administrative procedures to unresolved Medicaid liens or other rounds of appeal processes).
Settlements can be subject to appeals, meaning that even after a decision is made another round of legal proceedings is necessary. In the appeals process, which may in itself take years to reach completion, they review the amount of your award or its distributional elements.
The appeals process might take months or years and many plaintiffs decide to apply for the Post-Settlement Advance in order to cover the financial gap between a settlement decision and a settlement payout.
The greatest risk a plaintiff can have in a Post-Settlement Advance is that of unforeseen problems such as an inability of the obligor to pay the agreed amount upon the settlement.
But, as we have mentioned earlier, Legal Funding is non-recourse, and if for some reason your obligor is unable to pay, you would get to keep your funding advance without having to worry about repayment.
The Legal Funding Application Process
The application process for Legal Funding is free and without obligations. A good Lawsuit Company does not charge any upfront fee or any monthly fee.
Lawsuit advance is a totally safe, risk free and secure solution. It protects you, your family, and your hard-earned assets.
The Money Transfer of Legal Funding
Once the Lawsuit Advance has been approved, the plaintiff receives it's legal funding the next business day or the same day depending on how quickly the documentation requested by the underwriting team is received.
3. Do Your Research and Find a Legal Funding Company You Can Trust
Once you have decided to seek financial aid through a Legal Funding Company instead of other means of financing, you must be sure you are choosing a Legal Funding Company that will provide you the money you need without being too expensive or charging unnecessary fees.
Finding a Legal Funding Company that you can trust demands your full and complete attention.
Therefore, your research must be extensive and detailed. Search for as many Legal Funding Companies as possible. Keep track and make detailed notes of all the information provided to you by the companies you connect with.
The Legal Funding Company who provides you with specifics usually runs a highly professional business. If for some reason they hesitate to answer your questions or do not reply to you at all, then you have probably come across an unprofessional Legal Funding company and you should cross them off your list immediately.
4. Check What Are The Legal Funding Rates
In order to get the best deal at the end of your settlement, you must make sure you gain the most while you spend the least.
When you ask for the legal funding rates almost every Funding Company will give you a “multiple” range, or an interest rate. It is very important to be extremely careful of high rates and adverse terms.
Also, you must watch out for legal funding companies that do not give you any information about the amount of money you should be paying back. Also, be very careful and insist on a detailed description when it comes to hidden fees. If you are dealing with a respectable legal funding company, these fees should not be hidden, and they should share them with you on your first, initial inquiry.
5. Verify Whether The Legal Funding Company Is A Broker Or A Direct Funder
When you calculate and estimate your future finances, you take all possible costs into account. Therefore, make sure to verify if you are dealing with a Broker or you are connecting with a Direct Legal Funding Company.
A Broker is a person that connects plaintiffs to other funding companies. Beware that a broker is a middleman and that his/hers main concern is to get you to sign a deal. Nevertheless, a broker is usually very well informed about the rates, opportunities, and the various possibilities that you might take into consideration when planning to apply for an Advance.
If you decide to deal through a Broker make sure you agree on terms before signing a deal. Some legal funding brokers charge up to 20% and that amount is rolled into your contract so that you pay interest on it.
6. Find a Cost/Benefit Level That Works For You
Now that you have undergone a vast amount of Legal Funding research, collected all the necessary details that will be crucial in making your final decision, it is time to narrow down your potential Legal Funding Company list.
Do not forget that lawsuits are your attorney’s primary occupation and that they have much more experience in dealing with the Legal Funding Companies. Present your lawyer with your list and ask if he/she has any recommendations. If so, feel free to ask your lawyer why he/she is in favor of the recommended Legal Funding Company.
7. Set Up A Call Or A Meeting At the Legal Funding Company
After you decide which Legal Company Funding you will apply for, you should set up a call.
Go visit their website, fill out the contact form or reach out directly to them by simply dialing their phone number and speaking to them directly.
8. Before a Call, Prepare the List of Questions You’d Like to Ask Legal Funding Provider
As we all know, good preparation is a key to success. Before you call the potential Funding Company, you should make a list of all questions you’d like to ask.
When you get to talking about the Advance, the most important questions should be related to rates and fees. Accordingly, make sure you get detail answers about their fees, hidden rates and any other obstacles or privileges that might be important to you.
9. Ask Legal Funding Provider To Review The Contract Before Signing
When you are reviewing your contract keep in mind that you are dealing with simple mathematics. Make sure that your award amount, rates, and fees are clearly stated and that they coincide with your prior oral agreement.
A finance gap that’s easily created when you are involved in a litigation process can cause a serious impact on your life and lives of your loved ones. Luckily, you can put your burden at ease by applying for a Lawsuit Advance with a Legal Funding Company.
Depending on your litigation status, you can apply for a Pre-Settlement or Post-Settlement Legal Funding Advance. As every business arrangement is always done with maximum possible attention getting a Plaintiff advance should also be treated as such.
Therefore, make sure you do all the necessary preparations before you reach a final decision.
In order to gain the most out of your settlement, you need to find a Legal Funding Company that best suits you. Learn about Legal Funding in general, do a broad search of companies and based on their rates and fees make your final decision in agreement with your attorney.
Now your life doesn’t have to be on hold when unexpected developments occur. If you’d like to learn more or get a custom Legal Funding proposal don’t hesitate to reach out to us and we’ll make sure you get the best Legal Funding deal possible.
Start Your Free Application Now
- No credit checks
- If approved, you can get your cash in 24 hours
- If you lose your case, you owe nothing
- There is no obligation if you apply then decide not to take the funding