You’ve decided to file a lawsuit because you’ve suffered harm from negligence, discrimination, or another party’s actions. Lawsuits often take months or years before reaching a settlement or judgment, however.
During that time, you may struggle financially if you’re unable to work or your medical bills pile up. That’s when legal funding could help support your case. Here’s what you should know about it and when to consider it.
Assess If You Qualify For Legal Funding
Legal financiers offer funds in pending legal cases in exchange for a portion of potential future settlement funds or judgment. However, not all cases meet eligibility requirements. Funders often require:
- An attorney representing your case
- Strong liability against the defendant
- Significant damages that could warrant a substantial verdict or settlement
Additionally, personal injury cases often receive priority due to predictable settlement models. Employment, contract, and other civil disputes may also qualify depending on circumstances.
Research Potential Funding Companies
Reputable legal funders thoroughly examine cases since they’re investing their own capital. They analyze case merit, damages, jurisdiction, parties involved, etc. An established company with rigorous qualification standards is more likely to provide fair rates and contract terms, too.
When researching firms, consider factors like:
- Years in business
- Case approval rate
- Contract transparency
- Customer reviews
By comparison shopping, you can better weigh costs against funding amounts and repayment terms.
Understand How Much Funding You Need
Calculate all current and upcoming case-related costs to determine your funding needs. Common expenses covered by legal financing include:
- Attorney fees and litigation costs
- Medical bills
- Cost of living expenses if unable to work
Additional one-time expenses like home or vehicle modifications for disabilities also qualify occasionally. Be realistic when estimating total funding needs. Companies offer more attractive rates on smaller funding amounts that pose less default risk.
Review Payment Options And Repayment Terms
If approved for funding, you’ll choose either lump sum payment or incremental financing. Lump sum funding provides money upfront to pay associated case expenses directly. You receive all the funds at once.
Incremental funding pays expenses as they arise while allowing you to request additional funds if needed. This prevents paying interest on unused money. Monthly or lump sum repayment options are also available once your case settles.
Always verify repayment amounts tied directly to potential settlement sums or case duration, too. Understand all borrowed money and accrued fees owed regardless of case outcome.
Assess The Impact On Your Claim
While legal funding provides financial assistance, it also gives funders a monetary stake in your case. Some companies may try asserting influence over settlement decisions and case strategy if dissatisfied with progress. Thoroughly vet any company first and pick one that agrees not to disrupt your attorney’s management of the claim.
An attorney experienced with legal finance can also help evaluate possible impacts. Finding the right funding source can provide needed support without interference.
Consider Alternatives
Despite the advantages, legal funding still takes away a percentage of settlement funds and presents some risk if you lose. First, explore alternatives like borrowing from friends or family without the added fees. Personal loans or tapping home equity also provide lower-cost options but bear some risks.
If these don’t provide enough, legal funding could assist in weathering lengthy civil litigation or bankruptcy claim timeframes. Constantly evaluate costs against potential rewards.
Get Answers To All Your Questions
This quick financing comes with many contractual conditions that demand full understanding. Seek clear answers on:
- Will suspended repayment require interest if I replace my attorney?
- Who pays the funder if we lose the case?
- What happens if my spouse passes and assets transfer to children while repaying?
Reputable companies happily answer questions and even encourage outside attorney review of contracts. Transparent policies indicate good faith in agreeing to fair terms.
Proceed Only If The Numbers Make Sense
While waiting years for a settlement certainly warrants frustration, don’t let emotion override logic. Seriously weigh repayment totals and evaluate all alternatives before moving forward. If the math makes sense for your situation, contract with care and use funds judiciously.
Legal financing provides a path to continue pursuing a worthy case when in a financial bind. Still, undertaking repayment obligations requires full understanding on your part as the plaintiff.
Final Thoughts
Legal financing serves as an option to ease financial constraints. Take time to thoroughly research funders, analyze total repayment costs and investigate alternatives first, however. If, after careful consideration, funding still makes the most sense, be selective in picking a financing company and meticulously understand all repayment terms involved.
Legal funding introduces additional complexity but also the opportunity to successfully sustain your claim’s merit when it matters most.
