A man once came to a funding company to get a cash advance on his motor vehicle accident case. The injury was horrific; the man lost his eye in the accident. The insurance coverage was great – a commercial policy. The liability was perfect, on paper at least. The accident report showed the other driver was clearly at fault. Surely this was a slam dunk, right?
Wrong. The man lost his case at court and he, his attorney, and the funding company all walked away with a loss. How is that possible? How could this case possibly have lost? It turns out, the man had been in a bar brawl the night before the motor vehicle accident where he lost his eye. The injury had nothing to do with the car accident.
You’ll have to forgive funding companies for being a little skittish about which cases they fund. Even companies like Uplift Legal Funding, who are extremely knowledgeable about the ins and outs of lawsuits, like to make sure they’re thorough when approving a case. That is of little consolation to the injured plaintiff, though, when they receive a denial for funding. But you should be a little heartened. Sometimes when a case is denied for funding, it doesn’t mean that the case is bad. Here are a few common reasons why cases get denied for pre-settlement loans.
1) It’s too early in the case.
This is tied to the fact that sometimes not enough documents exist to evaluate the claim. You may have been involved with a truly terrible accident with life-threatening injuries. But if it only happened a few days ago and there have been no medical records produced yet, and the police report was requested but still hasn’t been received yet, there simply isn’t enough data to go on. Funding companies don’t like to take a plaintiff’s word, no matter how trustworthy they may be. They need proof.
Solution: wait until the essential documentation is in (police/incident report and either an operative report or a diagnostic report showing an injury). Insurance information is preferred but not essential.
2) Your case may be in a difficult state or it may be a difficult case type.
Litigation finance is a difficult industry in that each state has different rules and regulations that govern it. Some states are more difficult than others, and different funding companies concentrate their fundings in different states. Similarly, not all case types are fundable by every company. The good news: what one company can’t consider might be another company’s preferred case type.
Solution: If a company denies your case because of state or case type, try another funder. Uplift Legal Funding services one of the widest ranges of acceptable states and case types around.
3) Liability is unclear, split, or straight up the plaintiff’s fault.
“I have to have a good case! Why else would an attorney have taken my case?” This is a common mantra when someone is denied for liability. But attorneys take cases often without ANY knowledge of the case other than a brief description by the plaintiff. Sometimes the facts of the case don’t back up what the client says. Other times, the liability might be unclear. That is a dangerous proposition for a funder, like flipping a coin. And sometimes the plaintiff might only be 1% responsible for the accident. Normally that’s fine, but there are some states where even 1% guilt means no recovery.
Solution: If liability is unclear, wait to see if your attorney is working on clarifying the liability (through expert reports, witness statements, etc.) Resubmit with more information.
4) The liens may be too high on the case
A case could be great and a plaintiff could feel confident they will earn the full policy (let’s say $100,000). However, if that plaintiff also owes child support, and all of the medicals were provided on a lien basis, that number goes down pretty fast. Rather, that plaintiff could still win $100,000, but after paying their attorney his cut, plus expenses, and subtracting the rest of the owed liens, there may be too little left for the client to considering funding against the proceeds.
Solution: Often times there is not a solution here, unless the lien amounts were incorrect. For instance in a funder thinks there is a $50,000 child support lien when there isn’t, make sure to get proof of that. It will help clear it up for them.
5) Some funders won’t buy out other funding companies
It makes sense to stick with one funder as long as possible. Getting multiple companies involved can have any number of detrimental effects. However, one funder might say “no more money” and then you’re left hanging. Some new funders won’t buy out a prior funding. But some do.
Solution: Some companies like Uplift consider buyout cases. Contact us today to see if your case qualifies for a legal loan.