Also known by so many names like professional funding, litigation financing and even settlement funding, legal based or law financing is mainly a process of the mechanism through which the litigants can easily finance their litigation and some of the other legal costs through any of the third party funding firm. The financing structure over here is more or less similar to that of the legal defense funds, where the companies are able to provide you with monetary help for the lawsuits but mostly used by those without any stronger financial resource to take the case forward.
On the other hand, this idea of legal financing is always likely to be used by the plaintiffs in a case where the legalized defense funds are used by the defendants in this regard. The money that can be procured from the legalized financing firms can always be used for any possible reason, which can be associated with either litigation or anything to do with a personal matter. Moreover, the money that you can obtain from the legalized defense funds is mostly used for funding the litigation and some of the legal costs only. You can try checking out on the debt consolidation ratings to be sure of these practices for now and understand more about litigation funding arena.
Non-resource based cash advance:
You must know this fact that the legal financing firms are able to provide the litigants with the non-resource based cash advance in exchange for the percentage share of the settlement of the judgment as made. Even after going through some of the superficial similarities to any of the unsecured loan with the help of a traditional lender, these legal financing services are operating in a different manner from the loan.
- In general terms, litigation funding is not at all considered to be a form of a loan.
- It is more like a form of venture capital or asset purchase, which people have to work on till the end.
- So, it is true to state that legal funding advance is not debt and should not be reported to any of the credit bureaus.
- So the credit ratings of the litigants will not be affected by the litigant at all while procuring the legal funding advance.
Providing money in hefty amount:
It has been found out that the legal financing firms will generally offer money in hefty amount, and no specified amount is established for the current litigant purpose. In case, the case proceeds towards the trial and litigant loses, then the third party based funding firm will be the one to receive nothing and even losing money they have invested for the said case.
- In simple words, in case the litigant loses, he will not have to repay the money.
- Along with that, the litigants will not have to pay any of the monthly fees after procuring the present legal financing.
- In its place, no payment of any of the kind is made until you are able to settle the case or the judgment can be procured. It might take months or even years after receiving legal funds.
- So, to get qualified for this form of funding with any of the legalized financing company, the case of the litigant must have enough merit that company deems its investment and can take a worthy risk, over here.
In case of tort litigation, the legalized financing service is mostly used to cover the personal injury cases. However, it can also be used for some of the other civil right cases, commercial disputes and even to cover the workers’ compensation based cases over here.
Qualification associated with litigation financing:
The legalized funding firms will not provide you with legal advice to the applicants. They are not even going to offer you with referrals to the attorneys out there. So, to just get qualified for the legalized financing, a plaintiff is the one to hire services from an attorney first. Just to apply for this form of legal funding, the plaintiff should complete one application form first and then offer the supporting documents as asked for in this regard.
- As these legalized funding firms are able to recover their investment only if the plaintiff recovers monetary help from the funded lawsuit, so the merits of the case of plaintiff need to be strong.
- It means that the plaintiff should have one strong argument that the defendant proves to be liable for the damages, as claimed in the present lawsuit.
- In this case, the defendant should also have the ability to pay out for the judgment upfront, whether by virtue of his own financial help or through any of the insurance coverage plan.
- The attorney of the injured party needs to agree to the current legal financing and have to sign one agreement, which will be consenting to the legalized financing.
- Added qualifications or just the approval factors might include the entire amount of damages sought with a sufficient form of potential recovery margin to justify the present investment. It will further cover up the background of the said applicant with the laws associated with the place of residence of the applicants.
- Some of the legalized financing firms over here are able to limit their said investment to specified forms of lawsuits like commercial litigation or even the personal injury claims.
Benefits to watch out for:
Lawsuits are always termed to be quite expensive and might progress slowly, over a period of multiple months and even years. At that time, most of the plaintiffs might feel a considerable amount of financial pressure and might need the money to pay up for the cost of litigations along with the cost of supporting them.
While obtaining during tort litigation, the legal financing will definitely help the plaintiff with money, which cannot wait for it any longer. The severely injured person might even get significant amount of personal expenses covered through this form of service. It will help them to lower the burden of pressure from shoulder.