When a person looks for legal remedy in a court of law, and does not have the finances to bear the expenses, ten he needs monetary help. And financing a lawsuit provides it. The costs covered by lawsuit financing companies include attorney fees, medical bills, health care, rent and mortgage, food etc. Personal injury, workers compensation, motor vehicle accidental injury, wrongful death, medical malpractice, product liability, breach of contract, fraud and others are all included in cases funded by lawsuit firms.
As it is non-recourse, this should not be mistaken for a loan. Thus the client does not have to repay the amount if he or she loses the lawsuit. The companies undertake the risk. A loan, on the other hand, usually has a definite payback schedule within a fixed period. There is no rigid schedule of repayment followed by lawsuit financing companies as there is no way of determining how long a case will run.
In order to lessen the risk of losing money these companies usually lookout for cases that have a strong chance of winning. An in-house attorney they have studies cases, and decides which of those are more likely to win. They fix the amount that is to be provided to the client, according to his or her needs.
There are three types of funding:
1. Pre-settlement funding
Companies provide funds before the verdict is announced. And these are usually provided when the client, due to some injury or some other reason, cannot work and earn money for paying the fees. But the verdict can go against the client. In this case the company does not retrieve the money.
2. Post-settlement funding
According to this type, firms give money only after the lawsuit is settled. But in such cases partial advances is allowed too.
3. Attorney Loans
The firms directly provide the attorney a long-term credit that will take care of all the costs incurred.
Think over the terms of repayment, and choices available before accepting help from such companies. The terms include the flat fee and the recurring fee. But the chances of getting such funding would be insignificant, if a case has a higher probability of losing. This is because lawsuit-financing firms scrutinize each case very carefully before providing help.
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