Debunking Lawsuit Funding Myths

Mar 22, 2010

Lawsuit funding is something that has become extremely popular in the last few years. Because of this there are a number of myths that are going around about them. Most of these myths are extremely untrue and push people away from this type of funding, which could actually help them. Here we’ll debunk a few of the more common myths so that you can understand the truth about lawsuit funding.

Myth #1: Vulnerability

One of the biggest myths going around is that lawsuit funding companies exist in order to exploit vulnerable plaintiffs. People believe that these companies want nothing more than to get as much money as they can from plaintiffs. They believe that they charge them a great deal of money up front in order to give the plaintiff the advance and that they require high interest rates and a number of charges every month that need to be paid monthly.

This is not true. A good lawsuit funding company exists in order to help people who need the service. They give a cash advance to someone who is in the middle of a lawsuit and who may not see the money that is going to be coming to them for a very long time, allowing them to be able to pay the bills that they have without having to wait for the settlement to be reached or for the money to reach their bank account. No payments are made unless a case is actually won.

Myth #2: Losing

Another common myth is that, if a plaintiff who has taken advantage of lawsuit funding has a case that is lost at court, they have to pay back all of the money that was advanced to them as well as the interest that is due on the advance. This is not true. A good lawsuit funding company only gives advances to plaintiffs who have a good chance of winning their case. If they do not win the case, no money is due from the plaintiff to pay for the advance that they received. They are able to keep the money that they received without paying it back.

Myth #3: Lawyers

And the third common myth that is going around is that lawyers are working in conjunction with lawsuit funding companies in order for all of them to get rich, like some sort of scheme. The assumption is that lawyers push their clients to get a cash advance from lawsuit funding companies and that they receive a retainer from the company for having pushed the client their way. This is definitely not true. There are many lawyers who do recommend lawsuit funding to their clients, but only because it can be of benefit to the client, not because it benefits the lawyer, and no reliable and trustworthy lawsuit funding company works with a lawyer in order to defraud their clients.