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Understanding Litigation Funding

When you are in a lawsuit, you look forward to the results turning in your favor. When you talk of litigation funding , it is a practice where a third party that is not involved in a case provides funding to the plaintiff involved in the lawsuit. However the financing is provided depending on the merits of a pending case as the person providing the funding needs to get their money back.

Its important for the company to look in to the lawsuit itself when financing the case because the money is not a loan. It is simply an assignment of the portion of the client or attorney’s interest in anticipated recovery of the client. The hard fact is that if money is lost when the case is lost . When it comes to a case being financed, some may question on the ethical nature of a lawyer referring a client to a lawsuit financing party.

Yes it is ethical if a lawyer refers a client to a lawsuit financing company provided they have no interest in the financing company. It has to be established also that the attorney handling the case will not in any way profit from the transaction. The company that is financing the case should not be involved in the lawsuit in a way that it will benefit if the case is lost by the client. There are benefits that come with clients being refereed to litigation finance companies . The client gets to rest easy if they have secured financing especially if they had no plans to raise the money otherwise. Its unfortunate that sometimes the client is not in a position to finance the settlement case and in such situations, the input of litigation financing will highly be appreciated. To secure pre-settlement advance, you have to undergo a process but it’s not complicated. Litigation companies will require you to fill some application to help them evaluate the case at hand.

The litigation funding company will weigh the merits of the case and if any questions arise, the attorney representing the company will be called upon to answer the questions. The clients waits for a day or two after submission of the case documents to receive a verdict on whether the company will support the case. If the case is taken , the company will forward a contract to the attorney representing the case, here they will outline transactions , rates and how they will receive the money from the company. Sometimes litigation financing will be a post settlement advance , this means that a case has already been settled. The need to get financing for already settled cases may be motivated by reason of court order approval, insurance companies dragging, Medicare resolutions or other reasons that are time consuming.

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