Financing a lawsuit helps a person pay for legal help in a court of law when they don't have the money to pay for it themselves. Companies that finance lawsuits pay for things like attorney fees, medical bills, health care, rent, mortgage, food, etc. Personal injury, workers' compensation, car accidents, wrongful death, medical malpractice, product liability, breach of contract, fraud, and other types of cases are funded by lawsuit firms.
But this is not a loan, because you can't get your money back. That is, if the client loses the lawsuit, he or she does not have to pay back the money. The companies take all of the risk on their own. A loan, on the other hand, is usually paid back in a certain amount of time. Since there's no way to know how long a case will last, lawsuit financing companies don't have a set plan for when you have to pay back the money.
Most of the time, these companies look for cases that have a good chance of winning, so they don't lose as much money. They have a lawyer on staff who looks at cases and decides which ones have the best chance of winning. After that, they decide how much money to give the client based on what he or she needs.
There are three main ways to get money:
- Pre-settlement funding:
Companies give money before the decision is made. Most of the time, these are given to people who can't work and pay their bills because of an injury or something else. If, on the other hand, the client loses, the company does not get the money back.
- Post-settlement funding:
Firms only give money after the case is over. In this case, though, they do let you get a partial advance.
- Loans to lawyers:
The firms give the attorney a long-term line of credit that will cover all of the costs.
But before getting help from one of these companies, you should think about how you will pay them back and what other options you have. There is a flat fee and a fee that is paid every month. One should look into different companies and choose the one that best fits their needs. But there isn't much chance of getting this kind of funding if the case has a high chance of losing, because firms that help pay for lawsuits look at each case very carefully before helping. Most of the time, this kind of service is only given to people whose lawyers are willing to pay the huge costs that the client cannot pay.
Some clients are often forced to pay a lot of money to get lawsuit financing. For example, they may need to pay their medical bills, rent or mortgage, or use health care facilities. If you don't have any other way to make money, lawsuit loans are often the best choice. It is best to have your lawyer help you get a lawsuit loan because he or she might be able to find a funding company with the best terms. Before you sign up with the lawsuit funding company, an attorney can also help you look over the contract.
