Legal Funding FAQs

What is Legal Finance?

Legal finance is a specialized form of funding that serves two main groups: attorneys and plaintiffs. Furthermore, this funding is non-recourse. In other words, you’re not personally liable to repay the amount unless you win your case.

To give you a clearer picture, let’s consider some examples. If you’re an attorney with a strong case that’s likely to win but need funds for operational costs, we can advance you a portion of your expected legal fees. On the other hand, if you’re a plaintiff in a personal injury case and need money for medical bills, we can provide you with a part of your expected settlement.

What Kind of Funding Options Can I Expect from Baker Street Funding?

At Baker Street Funding, we’re not a one-size-fits-all kind of funder. We offer a range of non-recourse litigation funding products tailored to your specific financial needs and case. Our legal funding options include:

1. Pre-settlement funding 
2. Post-settlement funding 
3. Law firm financing 
4. Medical lien funding
5. Corporate litigation funding.

How Does this Differ from a Traditional Loan?

Here’s the twist: You don’t have to start repayments immediately. Instead, repayments are made from the settlement amount or legal fees once your case is resolved. This is a key distinction that sets legal funding apart from traditional loans, where monthly repayments are obligatory, regardless of your case’s outcome.

What States Do You Serve?

Good news for law firms: Our attorney funding services are available across all states in North America. No matter where you practice, Baker Street Funding can fund your litigation.

What Types of Cases Do You Typically Fund?

We’re pretty versatile when it comes to the legal cases we fund. Whether it’s personal injury, commercial litigation, or something in between, we’re open to discussing how we can assist you.

What Are the Rates for Pre-Settlement Funding?

Our rates are custom-tailored to each case. You can generally expect rates to range from 2.95% to 3.4% monthly, and these are non-compounding rates for plaintiffs. The good news is that these rates are fixed; they won’t increase over time. If your case takes more than three years to resolve, all charges stop after that third year.

Caution: Be wary of companies that claim to offer 1% rates. Always read the fine print, as these rates are often compounding and can be misleading.

Is Pre-Settlement Funding Right for Me?

If you’re a plaintiff in a lawsuit and need immediate financial relief, pre-settlement funding could be the best option for you. Consider your willingness to sign with a company that offers a monthly rate for this service before making this decision.

Is My Credit Score a Factor in the Approval Process?

Your credit score is not a determining factor in the approval process for pre-settlement funding. The primary consideration by underwriting is the strength and merit of your legal case.

Can I Pay Off the Funding Early? Are There Any Penalties?

Yes, you can pay off the funding early if you wish. There are generally no penalties for early repayment, but it’s always best to check the specific terms of your agreement.

What Should I Look Out for When Choosing a Funding Company?

Transparency is key. Look for companies that are upfront about their rates and fees. Non-compounding interest rates are generally more favorable. Also, don’t underestimate the power of customer reviews; they can provide valuable insights into the company’s reliability and quality of service.

How Does Pre-Settlement Funding Work?

The process is quite straightforward. First, you apply for funding. Your case is then evaluated, and if approved, you receive the funds. During this process, you’ll need to provide details about your case for evaluation. Once approved, the funds are yours to use as you see fit.

How Long Does It Typically Take to Receive Funding Once an Application Is Approved?

Once your application is approved, the funds are usually disbursed within 24 to 48 hours. However, the exact timeframe can vary depending on your bank and other logistical factors.

What Types of Legal Cases Are Most Commonly Eligible for Pre-Settlement Funding?

Pre-settlement funding is available for a variety of legal cases, including but not limited to personal injury, car accidents, civil rights litigation, employment disputes, and commercial litigation. The key factor is the merit of your case; if it has a strong likelihood of winning, it’s likely eligible for funding.

Can I Use the Funds for Any Purpose?

No, there are no restrictions on how you use the funds. Whether it’s for living expenses, medical bills, rent/mortgage, child care, or other needs, the choice is yours.

Do I Need to Have an Attorney to Apply for Pre-Settlement Funding?

Yes, having an attorney is a requirement for applying for pre-settlement funding. This ensures that your case is legitimate and has a reasonable chance of winning.

What Happens If I Lose My Case?

One of the benefits of pre-settlement funding is that it’s non-recourse. This means if you lose your case, you’re not obligated to repay the funds.

How Is Pre-Settlement Funding Different from a Loan?

Unlike traditional loans, pre-settlement funding doesn’t require credit checks or employment verification. It’s based solely on the merits of your case.

Can I Apply for Funding More Than Once?

Yes, you can apply for additional funding if your case takes longer than expected to settle. However, each new application will require a separate evaluation.

Should I Know About Any Legal or Ethical Rules Before Getting Pre-Settlement Funding?

Absolutely, you should! Think of pre-settlement funding as a financial partnership between you and us. It’s a non-recourse deal, meaning you only pay us back if you win your case. But like any partnership, you should know what you’re getting into. Always chat with your attorney to make sure you’re making a smart move that works in your favor.

Is My Information Confidential?

Absolutely. Baker Street Funding adheres to strict confidentiality and privacy standards to ensure your information is secure.

Yes. You should understand that pre-settlement funding is a non-recourse financial agreement and that you should enter it with full awareness of the costs, terms, and conditions. When seeking financing for your case, always keep your attorney informed. Their expertise will assist you in making a well-informed decision that maximizes your benefits. Additionally, you should always read your funding contract carefully.

Is There a Maximum or Minimum Amount I Can Apply For?

The amount you’re eligible to apply for is closely tied to the value of your legal case. While each funding company sets its own minimum and maximum limits, at Baker Street Funding, we offer a tailored approach. You can apply for up to 10% of your expected settlement if your case is ongoing, and up to 30% if your case has already been settled.

What Happens If My Case Settles Quickly?

If your case settles quickly, you’ll be required to pay back the funded amount along with any agreed-upon fees. The quicker the case settles, the less you’ll likely owe.

How Do I Update My Contact Information with the Funding Company?

Updating your contact information is usually very simple. You can do this by contacting your funding associate or by calling us at (888) 711-3599.

How Important Is Transparency in Interest Rates and Fees When Choosing a Pre-Settlement Loan Company?

Transparency in interest rates and fees is paramount when selecting a pre-settlement advance company. Hidden fees and unclear rates can lead to financial strain down the line. Always opt for a company that provides full disclosure and transparent terms.

Why Is Having an Attorney a Mandatory Requirement for Most Pre-Settlement Funding Companies?

Having an attorney is important for more than just the strength of your case; it’s also a practical requirement. In our funding structure, the amount you receive is set up as a lien against your pending settlement. Your attorney is responsible for repaying this lien once your case is settled. This guarantees us a seamless repayment process and adds an extra layer of security to the transaction for everyone involved.

How Should One Balance the Need for Quick Funding with the Quality and Reliability of the Funding Company?

The need for quick funding is understandable, especially when you’re facing financial hardships. However, consider choosing a funding company that doesn’t just promise speed but also delivers on quality and transparency. A reputable company should be able to process your application within 24 hours while offering favorable terms. The bottom line is that speed and reliability should go hand-in-hand; you shouldn’t have to sacrifice one for the other.

How Do I Get Started?

Starting the lawsuit funding process is simple. Fill out our online application form, and our team will get in touch with you for the next steps.

What is the process for plaintiff lawsuit funding?

If your client wants to apply for funding, they will need to fill out the application form or answer a few questions from one of our team members to determine initial eligibility. Baker Street Funding will then ask you for some documentation surrounding your client’s claim. Generally, we will require documentation establishing liability, injuries, and insurance information from the defendant. Once we receive those documents, we will review the claim and, most times, will be able to make a funding decision immediately after. If we have additional questions or need clarity regarding certain documentation, we will email you our questions. Once those questions are answered, we will then be able to make our funding decision. Once a funding decision is made, we will provide you and your client with a copy of our funding agreement. After reviewing the agreement with your client and answering any questions you may have regarding the agreement, we will ask the client to execute the paperwork and have you provide us with acknowledgment of our lien. After receiving both client’s signature and the attorney’s acknowledgment, we will release funds to the client in the manner they request (bank wire or check).

How do you decide how much lawsuit financing a plaintiff can get?

After discussing your client’s needs and financial situation, we will analyze the claim. We base our funding decisions on our perceived net present value of the claim and will structure our funding amounts based on that value and the client’s needs.

What are the minimum funding amounts for plaintiffs?

Baker Street Funding will advance a minimum of $1,500 in funding to plaintiffs involved in non-settled claims. On settled claims, we require that the gross amount due to the plaintiff be no less than $50,000.

What are the interest rates for plaintiff lawsuit financing?

At Baker Street Funding, we strive to provide our clients with the best rates and fees available. Attorney funding has an interest rate of 2% per month simple. Our contracts are transparent and priced on a case-by-case basis.

If you are requesting funding for a client, the interest rate generally will be around 2.95% to %3.00 a month (simple interest). Attorney referrals get the lowest rates available. 

If someone quotes you a lower rate than 2.95% monthly, that usually means that it will be a compounding rate for your client, and it will cost them more money over the course of one year than the initial 2.95% – 3.00% non-compounding that we offer attorneys for plaintiff funding. 

We provide reduced rates for clients that are referred to us by their attorney or medical provider.

I do not wish my client to get funding.  

If you do not wish for your client to get funding, we kindly ask that you notify us of that before we conduct our due diligence on the claim. We value your time and opinion and invite you to learn about our firm and how we can provide intelligent financial solutions to attorneys and their clients.

What are the chances my client will be approved for a legal funding advance?

Baker Street Funding’s initial review of your application is based on our initial phone call, where you will provide publicly available information about your client’s claim. If interest is expressed and depending on your client’s needs, we may require further documentation and a scheduled call with our underwriter. Based on that call/communication and documentation, our underwriter will make the ultimate funding decision. Most cases sent by attorneys get funded because attorneys usually send strong claims.

Can legal financing affect attorney-client confidentiality?

Our involvement as investors does not affect the attorney-client privilege. Multiple recent rulings in all court matters have upheld that conversations with third-party lawsuit funding companies are protected by common interest doctrine and thus deemed privileged and confidential. You can rest assured that you are in no way waiving any of your legal rights to confidentiality by seeking pre-settlement funding for your client.

Is plaintiff litigation funding legal?

Lawsuit funding or plaintiff litigation funding is legal and provided in almost every state in the country. While state requirements differ in every state, we maintain compliance with the regulations in every state we fund.

Are there any upfront fees?

No, there are no upfront fees for Baker Street Funding to review your case or at the time of funding. We are compensated only upon the successful settlement of your client’s claim. Since all funding provided is non-recourse, your client is under no obligation to repay the funds if the case does not reach a successful settlement and payment is due when funds arrive in escrow.

How can legal funding help my practice?

As with any business, running a law firm requires a steady flow of capital. Many attorneys struggle to maintain a successful legal practice simply because of fee delays. Those fees are the lifeblood of any thriving practice: without them, it becomes almost impossible to build cases, find new clients, or even meet basic expenses like payroll.

Different types of legal funding options are designed to fit the needs of everyone. Whether solo practitioners or a larger firm, it allows all types of contingency fee attorneys to build their caseload and litigate properly while waiting for more mature litigation to be paid out. 

Law firm financing can be a great asset to contingency fee-based attorneys. It helps them gain access to cash flow to help pay expenses smoothing out their income stream, which can otherwise be extremely difficult to manage. While each attorney and firm’s situation is different, we have created a bespoke solution for every different type of financing need. We can help you manage your portfolio of cases and provide capital based on that portfolio to help with payroll and marketing capital. We can also provide case-by-case specific financing to help cover discovery costs, expert witness costs, administrative costs, and maintain an office space without worrying about running out of capital.

Does the funding provider have autonomy over the litigation?

The funding provider does not have autonomy over the litigation. We generally remain passive in the disputes we have been investing in. As per the terms of the agreement with legal counsel, the claimant maintains full autonomy overall decision-making. We will not intervene in any way with the relationship between the claimant and its lawyer. In certain jurisdictions across the globe, Litigation Funding programs may enable funders to have a higher degree of participation in the dispute. However, we believe that our job should be to provide additional expertise and financing so that the plaintiff and the law firm can draw on if and when necessary, rather than having some other sort of influence over the proceedings.

What types of cases make good candidates for litigation financing?

Typically, litigation funding is an extremely selective industry. We look for claims that have a minimum damages value of $10 million or more. Any plaintiff looking to minimize their equity exposure on litigation that can be lengthy and unpredictable or is looking to hedge against a sub-optimal outcome would be a good candidate for litigation funding. The recovery on the claim should greatly exceed the cost to litigate as well as the amount of financing that the plaintiff is looking to secure. Most types of claims are eligible for financing at any procedural stage.

Litigation funding vs. traditional financing

Many law firms looking for lines of credit approach to their local or national financial institution. These banks may provide you with a business loan or a LOC (line of credit). The problem with these products is twofold. They do not take into account the intricacies of running a legal practice and, most times, do not provide enough capital as is needed. The other issue is that unless your firm has had a long-standing relationship with the bank, you will need to personally guarantee the financing. That means you are risking the money you’ve made to secure the funds you need to make in the future. With Baker Street Funding, those worries are taken care of. Our attorney funding process is based on your current and former case portfolio. We also take into account intangible things, such as your previously settled cases. Our funding agreements are non-recourse, and thus you never have to personally guarantee our contracts.

What is litigation finance for attorneys?

Litigation finance for law firms is a type of legal funding service that is created specifically for contingency fee-based attorneys, representing personal injury plaintiffs and large commercial litigation lawsuits. There are multiple different subsets of funding for lawyers, including case cost financing, voucher funding, attorney lines of credit, and post-settlement fee advances.

What are the benefits of litigation finance?

There are many benefits to financing a claim. For small and mid-size companies, the cost of litigation can be daunting and have an adverse impact on their ability to do business on a day-to-day basis. Litigation financing helps minimize the financial impact as well as hedges against the risk of an adverse outcome. For attorneys, a typical case in the litigation process does not go to trial and it takes an average of 20 months to settle. When litigating a case, that timeline extends and there is uncertainty surrounding whether you will successfully win a judgment. This process makes running a successful practice difficult and attorneys need some sort of financial backstop to help cover costs until their next case settles. Contingency fee attorneys are not guaranteed any economic benefit unless they win their case. If an attorney invests years of time, effort, and capital into a case that settles in favor of the defendant, he or she walks away with nothing. Litigation financing can offer a multitude of options for law firms and can help increase the firm’s capacity for new claims through risk-sharing agreements.

What are the downsides of litigation financing? 

As with any financial product, litigation finance does have a downside. The first and most talked about downside would be cost. Non-recourse financing, by nature, is an expensive option. Because of the large amount of risk assumed by the funding company, the required rate of return must be commensurate to that risk. Another downside to litigation funding is the process itself. Analyzing a claim is a laborious and time-consuming process that has no guaranteed successful outcome. There is always the chance that a litigation finance company goes through the long process of due diligence and ultimately decides not to invest into a claim. 

What information does a litigation finance company need from me? 

Most of the information provided to a litigation finance company will be provided through the plaintiff’s counsel. Litigation funders will do a deep dive into your case so that they understand the risks and potential outcomes of the litigation. They will do a thorough review of all documentation that has or will be produced in discovery in addition to one or multiple conference calls with both client and counsel. Reputable litigation funding companies will never ask for information or documentation beyond to scope of your attorney’s work product so that all information is protected through attorney-client privilege. You should also be aware that documentation and information related to the case that is shared with a litigation funder is protected whether or not the company invests in the claim.

How long does a litigation finance contract typically take to generate?

The litigation finance process is different from lawsuit financing and a lot more complex. This includes an in-depth analysis of a case or portfolio of cases (for attorneys). Normally the due diligence period is 60-90 days. The speed of this process is normally dictated by how complex a case is. Once an initial review is complete, we will normally offer a term sheet to the client. If the term sheet is agreed to by both parties, we will then complete a final due diligence check. This can take anywhere from a week to two months. Once that process is complete and a contract is dually executed, funds will be distributed to the client.

At what stages of litigation is legal funding available?

Funders will normally fund a claim in any stage of litigation from pre-litigation to post-settlement.

What happens if the case is lost?

Since litigation funding is a non-recourse investment, if there is no recovery or if the case is lost, you are under no obligation to repay the funds.

What type of companies can apply for litigation financing?

Any company regardless of size or status is eligible for litigation funding. Any company looking to limit equity and risk exposure generated through litigation is a good candidate for funding. Most companies, regardless of size, only have a limited amount of resources that they can dedicate to legal matters. If a company is using all of those resources or has used all of those resources, then litigation funding may be a good solution for them.

How can litigation funding help my practice?

Litigation funding can become a great asset to your practice by helping you gain access to case flow to help pay expenses while waiting for a case to settle or go to litigation. While each attorney and firm’s situation is different, we have created a bespoke solution for every different type of attorney financing need. We can help you manage your portfolio of cases and provide capital based on that portfolio to help with payroll, office space, and marketing capital, or we can provide case by case specific financing to help cover discovery costs, expert witness costs, administrative expenses, and litigation expenses.