A Guide to Personal Injury Lawsuit Funding
May 13, 2010
At its best, the legal system is designed to ensure that everyone can have their day in court, whether they are being charged with a crime, contesting a speeding ticket, or taking legal action against another party in a civil trial. But the legal system isn’t necessarily set up for everyone to navigate easily. It can be difficult to know the ins and outs of the process – and it can be more difficult still to pay for all of this. Not only do you need a qualified guide, your attorney, you need the money to pay your bills. And buy groceries. When the money needs to come from somewhere and it can’t come from you, consider lawsuit funding. This can be the answer to your cash-flow problems and the beginning of the resolution of your case. How do you go about getting this funding?
When trying to find funding for your lawsuit, it is important to choose a firm that is as transparent and open in their business practices as possible. They should explain each step of the process, their terms, and your rights and their responsibilities. One key thing to look for is a company that will provide you with “non-recourse” funding. This is not a loan. With some lawsuit funding firms, you are taking a loan which you must pay back regardless of the outcome of your lawsuit. In other words, if you lose, you still have to pay. A firm which offers non-recourse funding, however, will take the loss if you lose in court. Here are some other things to ask before you decide:
- Rates. Reputable funding companies will advise you to use other means to fund your lawsuit, such as bank loans or loans from family. Their rates, while they may be competitive, are typically higher than you will find elsewhere. This, as they will tell you, is your last resort. Make sure they don’t sugarcoat it for you. You are far better off understanding your terms of agreement than being led to believe this is “free” money.
- What are the minimum and maximum funding limits?
- How soon will you get your money? And what can the money be used for? That is, are you free to use it as you wish?
- What are their policies regarding privacy and the confidentiality of your case? To what extent are they involved in your case? Their involvement should be limited to providing the funding.
After you have chosen a firm, take the following steps:
- Speak with your attorney about lawsuit funding.
- Have an initial interview and consultation with the firm and your attorney, if possible.
- Have your attorney provide your case information to the funding company.
- Wait for approval. Your lawsuit funding company will call you or your attorney to let you know you have been approved. You will receive a funding agreement for your approval. You can decide to request less money than the amount offered, as long as it meets minimum funding limits.
- Upon execution and return of the funding agreement, a check will be sent by next day mail.
- Cash your check, pay your creditors and your attorney, if necessary, and breathe a little easier until you resolve your case.