Litigation Funding A Financial Lifeline
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Litigation Funding: A Financial Lifeline
Summary
Pursuing a lawsuit can put a significant strain on your finances. Litigation funding offers a practical financial solution to support your case and manage living expenses.Understanding Litigation Funding
Lawsuits can be financially draining. If your personal finances are dwindling and your case hasn't reached court, consider litigation funding as a lifeline. This funding bridges the gap from the date of your accident to the settlement date, providing cash advances throughout your case.
Unlike traditional loans, litigation funding isn't a loan. A funding company buys a portion of the future settlement from your lawsuit, dependent on the case's outcome. You receive cash upfront in exchange for a specified amount of the settlement or judgment. Litigation funding often covers medical and living expenses.
It's available for various case types, including personal injury, medical malpractice, employment discrimination, and wrongful death.
How Lawsuit Financing Works
Litigation funding allows plaintiffs to receive money from a lawsuit financing company, which then places a lien on the lawsuit's proceeds in exchange for immediate cash. This is provided on a non-recourse basis, meaning you keep the money even if the case's outcome is unfavorable.
Companies typically offer funding to those with strong cases. For them, it's an investment. If you win, they receive a portion of your monetary award. If you lose, they get nothing.
This means litigation funding is risk-free for you. If your case is unsuccessful, you don’t repay the company. If you win, you'll likely have more money than if you settled early, even after giving the funding company their share.
The Need for Litigation Funding
Litigation can be expensive. Most personal injury claims involve lawyers hired on a contingency fee basis, meaning no attorney fee is required unless the case is successful, and then it’s a portion of the recovered money.
For those paying legal fees out of pocket, litigation funding becomes crucial. Individuals severely injured by others’ negligence can face financial devastation, often unable to work and earn income during their recovery. Traditional loans aren't feasible due to income or credit history requirements, and monthly payments add further strain.
Litigation funding is a viable option for those low on cash. It helps cover living expenses, medical care, and personal costs, avoiding the need to sell valuables or borrow from loved ones.
This financial support allows individuals to pursue justice without compromising their responsibilities, focusing on recovery while awaiting a verdict or settlement.
Working with a Funding Firm
The number of companies offering litigation financing is growing. Obtaining funding is straightforward: contact the provider for a free consultation. The company will coordinate with your attorney, evaluate your case, and inform you?"often within 48 hours?"if you're eligible for funding. Typically, there’s no application fee, credit check, or employment verification required.
If approved, your attorneys maintain full control over your case. The funding provider stays uninvolved in strategy and receives payment only after settlement.
Choosing the Right Funding Firm
When selecting a funding company, consider these tips from the American Litigation Finance Association (ALFA):
- Work with a company investing for its own portfolio to avoid unnecessary costs.
- Share information only with your attorney, not third parties.
- Avoid multiple applications with different companies to prevent complications and extra work for your attorney.
- Always consult your attorney before signing a lawsuit funding agreement.
Litigation funding provides a crucial financial resource, enabling plaintiffs to focus on their recovery and achieve justice without financial sacrifice.
You can find the original non-AI version of this article here: Litigation Funding A Financial Lifeline.
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