Why Lawsuit Funding Gets Denied

Mar 17, 2010

Lawsuit funding has become extremely popular in today’s economy, and there are many reasons why it may have become so popular. Suffice to say, lawsuit funding has become so popular that more companies now than ever are getting involved in it. But that doesn’t mean that everybody is a good candidate for lawsuit funding. In fact, almost as many people as apply for funding get denied. One of the most common questions asked is “why did I get denied?” Understanding why you would get denied is a good way to figure out if you are a good candidate for lawsuit funding. Here are some of the main reasons why people get denied for lawsuit advances.

No Attorney

Believe it or not, many people believe that they can get lawsuit funding when they do not have an attorney. The main reason why a company would agree to give a plaintiff an advance is because of the information that they receive from a lawyer, which helps them to figure out if that plaintiff is likely to win their lawsuit. If you do not have a lawyer, the company will be unable to get the information that they need for the underwriters to make their decision. What’s more, though, is that a licensed attorney will be responsible for repaying the funding lein.

Wrong Case

Not every type of case can be funded by each company. Generally cases that are about personal injury, worker’s compensation, and commercial litigation are covered. There are, however, a few cases which cannot be covered, for various reasons, by a lawsuit funding company.

The Attorney

There are a few ways that an attorney can disqualify you for lawsuit funding. The first is if you have a fee agreement instead of a contingency agreement with your attorney. While there are some companies who will work with lawyers who are working on a fee basis, most of the time they prefer if the lawyer works on a contingency basis. This is because they know that attorney fees won’t be a factor in getting your case resolved has an incentive to do his best to win your case. This means that you win, the attorney wins, and the lending company wins as well.
A way that an attorney can throw a wrench into getting lawsuit funding is when they refuse to cooperate. If your attorney refuses to give the company the information that they need in order to figure out if you are a good candidate for lawsuit funding, there is nothing more that the funding company can do for you.


And the final main reason why people are turned away from lawsuit funding is if they have no equity in the case. Equity is the value of the lawsuit once all of the fees, liens, and any expenses have been taken out of the amount that you should win. If the company feels that you have no equity, they will be much less likely to take on your case and will turn you away, as they will not be able to earn back the money that they have advanced plus a profit, which is counterproductive for them.