When is it appropriate to seek lawsuit funding?
Mar 17, 2010
It is best to consult with one’s attorney prior to engaging in any lawsuit funding contract and in some cases attorneys can refer clients to a preferred and reputable lender. Lawsuit funding most often is negotiated through a finance company or broker and is technically not considered a loan, although the pre-settlement agreement operates very similar to that of a purchase agreement. A common misconception is that one’s attorney can provide lawsuit funding services, but this is not the case. An attorney must represent his clients in an unbiased manner without any conflict of interest. If a lawyer were to become a creditor of his clients, this would not be the case; as such state bar associations do not allow it.
Despite the inability of an attorney to loan money to clients, it is paramount that their expertise be utilized to make sure that the agreement entered into between the client and the lawsuit funding company is in the best interest of the case and client involved. Lawsuit funding is not a monetary solution for every case, but can be used to gain an advantage for those who would not otherwise have any other recourse.