7 Things You Should Know About Lawsuit Funding

Overview

These are the 7 things you need to know about lawsuit funding.

Nobody wants to get injured, nobody wants to pursue a personal injury case, and nobody really wants to take out funds from their legal claim. But you might need to. If that’s the case, here are 7 things to help you get reasonable funding at reasonable rates.

1. Lawsuit funding can be very expensive

While the other guys skirt around this, we tell our clients that lawsuit funding isn’t always the best option. Lawsuit loans aren’t loans at all. If you don’t win, you don’t pay. Funding companies determine your interest rate based on the perceived risk of your case. This is because they want to be compensated for taking on the risk of possibly not being repaid.

Does that mean you shouldn’t take the money? Not at all. If you are falling behind on expenses and the insurance company is trying to offer you less money than you deserve in a quick settlement, then a lawsuit loan might be for you.

2. Getting funding from a broker can be more costly, but not always

Brokers charge fees. Some include their fees in the contract, while others are paid outside of it. Finding a decent broker can help you shop around for terms that work for you—just remember that it can come with a cost.

3. Talk to your attorney before getting lawsuit funding

Funders need information to evaluate your case, and attorneys are busy. Letting your attorney know that you are looking for funding is helpful. Mention which funding companies you’re working with early on to make the process easier.

Remember that case managers look for three things:

1. Injuries. Do you have serious injuries? Have you undergone any treatment?
2. Liability. Is there someone else at fault? If you’re at fault, you won’t qualify.
3. Coverage. Who is paying? Funders like large insurance policies because that means you’ll get paid for the full value of your damages.

If a funder tells you that they have reached out to your attorney, follow up with your attorney as well and make sure they stay on top of it, especially if you need the money.

4. Lawsuit funding can be a tool to fight against big insurance companies.

It may be expensive, but it can be very helpful. Pool money from friends and family, or try to find other options.

Only as a last resort is lawsuit funding the best option.

Again, take only as much as you need, not as much as you want.

5. You’re the customer – ask questions and get answers!

People will only tell you as much or as little as you ask. It’s important to get informed. Before getting lawsuit funding, talk to a case manager and ask questions. What questions? Here is a list:

• Ask if the interest is simple or compound.
• Ask if they will be a direct lender or a broker for your request.
• Ask about up-front fees.

6. Applying everywhere can hurt your chances of getting a fast lawsuit loan

This is a tough one. When you apply to too many places, your attorney might be overwhelmed by requests. This can make the process take longer. Look for a few reputable companies and apply only with them to start. You can always apply with more later.

7. You don’t win, you don’t pay anything back

This one is easy. If you don’t win, you don’t pay. If your case settles, your attorney will pay the funding company the amount due. You have no personal liability to repay, ever!