Understanding Lawsuit Loan Facts So That Your Lawyer Could Get You A Lawsuit Loan Easily

Understanding Lawsuit Loan Facts So That Your Lawyer Could Get You A Lawsuit Loan Easily

Acquiring a lawsuit loan is certainly not a daily practice and so people may not have a clear idea about them. They may be having a host of questions about lawsuit loans and the way a lawsuit advance could be impacting them. People who are having some pending lawsuits find it difficult to afford the expenses associated with the entire process. They are perpetually tight on money. When people find it really difficult to make the ends meet, they may be compelled by circumstances to ask their lawyer to get them a lawsuit loan. When the plaintiff requests for a lawsuit loan from his lawyer, more often than not, lawsuit lawyers or firms do not encourage the idea. However, lawsuit loans are requested and provided in the case of:


  • Wrongful Termination or even Discrimination at Work.
  • Compensation of Workers in States which are Fundable.
  • Personal Injury, including premise liability accidents or slip & fall accidents.
  • Motor Vehicle Accidents.
  • Medical Malpractice.
  • Dog Bites.
  • Construction Accidents.

A lot of law firms discourage the lawsuit loan process when first asked about it. It isn’t an extremely popular process to begin with, which means the lawyers typically do not have a firm grasp on the financial model or how the lawsuits are funded. To them, it makes much more sense for clients to not borrow money from the firm or a third party. There are legal and ethical conflicts of interest involved with a law firm lending money to clients. You should do a good bit of research on your own and also understand what options you have and which suits you best.

We know that the lawsuit funding industry seems to be in its infancy and is hardly regulated. Clients and attorneys must stay vigilant because the regulatory environment is still very weak. In some states like Nevada, California, Texas, Florida, New Jersey, and New York have absolutely no regulations pertaining to pre-settlement funding. The dubious regulatory environment culminates in the exploitation of plaintiffs by the litigation financiers. As a qualified and experienced lawyer, there are numerous ways of preventing your client from contacting a shady lawsuit funding firm. Get in touch with the reliable and reputed https://libertylending.com for perfect lending solutions.

Some Important Facts about Lawsuit Funding for Every Lawyer to Keep Note of

  • The funding firm you are contacting could prove to be actually a broker-in-disguise. You must realize that nothing may be wrong with the concept of lawsuit funding broker. However, everything could be wrong if a lawsuit funding broker pretends to be the direct funder.
  • Broker fees are ultimately passed on to the plaintiff. Why do you think that a broker fails to introduce himself as a broker? Simply because they would be making 10 percent to 20 percent in terms of commission on whatever amount the plaintiff would get funded. It is quite natural for a funder to transfer the origination fee directly to the client.
  • It is quite common for fees to be more than 3.5 percent per month which is compounded monthly till the case is settled. At 3.5 percent when compounded monthly, and suppose the case takes roughly 12 months to settle, you could expect to pay more than 70 percent including the fees. In the event, the case goes on for 24 months from when the funding agreement or contract was actually signed, the client would be owing over 150 percent worth of interest.
  • Many funding companies would be charging application fees of almost $400. Several funders are not expecting the payment upfront. As such, they believe in deducting the application fee straightaway from the purchase price. So, the client would be required to pay interest even on the application fee.
  • Huge application fees would certainly not be reduced because of smaller advances. Some companies purposely give out advances worth $1000 along with $400 in terms of application fees. We, therefore, find that even before a day’s interest has been accrued, the client has been robbed of 40 percent already!
  • The second funder would be buying out the first funder almost always. In the case, the client acquired an advance from Company A and then a few months after that applies an advance from Company B, it is observed that Company B would be buying out whatever remaining interest from actually the first funding company. This is referred to as ‘paying off your initial funder’ in the industry.
  • As per https://fundmylawsuitnow.com, “The qualifying factors of pre-settlement funding aren’t the same as other consumer financial products. Instead of your credit score, lawsuit funding companies base their funding decision on the merit of your case. To put it simply, if your claim is strong, your chances of approval are very high and vice versa.”
  • Three reasons plaintiffs could be denied for lawsuit funding are when you are living in a state that does not recognize plaintiff funding, you do not have a qualified attorney to represent you and you have already obtained too much funding beyond a permissible limit from other companies.
  • The funding companies follow different fee structures. There are two basic fee structures. They are fixed payout amount once every six months and the other one would then be compound monthly interests. Both could be fair or excessive.
  • Aggressive funding firms would be over-funding cases for maximizing profits. You must not let a funding firm over-fund the client’s case. We know that over-funding would mean receiving almost nothing when the case is actually settled. Plaintiffs must remember to take only what is necessary for their lawsuit only. The advance must not exceed 10 percent of the worth of the case.
  • Regulatory conditions are dynamic and are changing constantly. Always ensure that the agreement terms are based on the present regulatory guidelines.

Conclusion: No Transparency Regarding Payoffs

If you work with a law firm, your clients must know exactly how much they will owe at regular intervals of 6 months after the funding agreement is agreed upon. Plaintiffs who are about to obtain lawsuit funding must also inform their legal representatives or attorneys as soon as they can. They have to be appraised of the situation so that they are in a position to sign the funding agreement once it is ready so that you receive the cash advance. You might also need their assistance through the process, which is why open and honest communication is an absolute must.