If you are involved in an active lawsuit as a plaintiff, the only thing you may be bothered about at the end of the case would be a nice compensation. You may devise smart case strategies with your lawyer and develop a strong claim against the defendant you aim to hold liable. In the end, a successful case would end up in an award of damages granted by the court, which makes up the loss you suffered, plus punitive damages at times to punish the defendant for his fault. The case may even end up with the other party proposing a settlement, which, if agreed, could leave you with enough compensation. This would help you make good your loss without going through the challenging phases of litigation.
However, it is known that lawsuits are inherently lengthy in nature, and at times torturous in the manner that they drain the pockets of the victims involved. Specifically, in cases of personal injuries, where plaintiffs are left with long-standing disabilities or impairment, they may not be able to continue to work for a living. This inability to earn money is supplemented by the expensive legal fees and charges for fighting a significant legal battle. Even where a favorable judgment is clearly apparent, it can take months to reach a conclusion and even more time to get that settlement award released. Some plaintiffs face severe hardships during these times and are financially challenged to the extent of not being able to put food on the table.
Why lawsuit loans?
In such scenarios, lawsuit loans can turn out to be a sigh of relief for such plaintiffs. While the finances have been exhausted and all sources of money seem choked, plaintiffs can apply for personal injury lawsuit funding from reputable legal funding companies. These companies provide instant cash to allow plaintiffs to meet their personal and household needs during the pendency of their lawsuit. In fact, freedom from accumulating bills is the biggest reason why plaintiffs take the path towards lawsuit loans.
In return, the company keeps a portion equal to the amount it had lent plus interests. If the case does not end up in a settlement or an award of damages, the funding would not be paid; the plaintiff would owe nothing.
A lawsuit loan or a pre-settlement advance will hence be a smart choice for you as a plaintiff. Anyone going through a round of civil litigation can sign up for a lawsuit loan with a funding company without paying any upfront charges. Remember that the gist of pre-settlement loans lies in the plaintiffs’ inability to pay out even a single penny until the lawsuit ends up in a settlement or jury award. This means that an excellent legal funding company would not require you to make any payments starting from the application phase until the litigation reaches its end.
Lawsuit funding costs vs. bank loans
The company would then assess your application contents and will reflect upon the gravity of your case. Surprisingly, credit ratings are not taken into account while examining an applicant’s credibility for a lawsuit advance, which makes lawsuit funding different from conventional bank loans. What else makes it distinct from bank loans? Since the company appreciates all the risks attached to your litigation, nothing would be payable if the case ultimately fails. Also, the borrower need not provide collateral or pay interest amounts and processing fees no matter what. Hence, plaintiffs will be at significant risk by obtaining a bank loan under challenging times while having an alternative option of legal funding.
The actual cost of lawsuit loans
With all these benefits contained by lawsuits loans, one may be suspicious of what the companies keep for themselves for all the services they render? Once the plaintiff wins the case, he is supposed to pay back the funding company the advance he had obtained during the pendency. This makes the principal amount being returned as it was. However, an additional fee or interest is also charged by the lawsuit advance company. With due honesty, these charges are high. This is because the funding company provides substantial financial grants to the applicants instantly, that too in return for a lawsuit, the very foundation of which lies at risk. The company eventually buys uncertainty and charges positively for it. Even reasonably high rates can sometimes be fair since companies need ample backup to lean on when the lawsuit fails and no recoveries are made.
Fees charged by each funding company may obviously vary, and some companies may even charge for filing and processing applications too. Most companies charge between 1.99% to 3.2% per month on the total amount borrowed in compound interest. The total cost that a plaintiff may have to bear depends on the size of cash advance he obtains and the period the lawsuit lasts for. The longer the matter is dragged, the more interest may be charged and then deducted once a settlement is secured.
Essential advice from your attorney
Owing to the variation in rates charged by each company, plaintiffs are highly advised to discuss the interest rates and payment plans with the funding company beforehand. It may also be wise to speak to the attorney handling your matter before applying for funding somewhere. The attorney may direct you to a lawsuit funding company that fits your instant case. He may also be better able to inform you of the case’s foreseeable results and how long could it probably last. Contracts for pre-settlement lawsuit advances are usually simple and straightforward. However, honest advice can clear out a lot of misconceptions for you.
Also, since the lawsuit funding company will definitely contact your attorney to get a hands-on overview of the entire case, it is better that your attorney is informed beforehand on your plans to seek funding externally. As mentioned before, the procedure is pretty straightforward, with no hidden charges or surprises for the plaintiff at the end.