If you are an attorney looking to pay for high litigation costs or a plaintiff who needs to pay bills, then you understand that without the cash flow to pursue wealthy corporate defendants, you could end up settling for less than your case’s fair value.
The real conundrum is that these defendants are aware that long drawn-out legal battles can drain plaintiffs financially until they either accept a low settlement offer or drop the case altogether.
Ironically, traditional lending institutions and banks do not see potential cash payments of settlements and verdict awards as assets, and they are not able to provide long-term financing to bring a dispute to its proper conclusion due to the high risks of litigation.
This leaves a void for those inadequately capitalized funds to dabble into legal funding where attorneys and plaintiffs can secure financing to assist them in seeing a case through.
To put it in perspective, litigation and pre-settlement funding companies exist to provide both claimants and attorneys with the needed financial resources by investing capital into civil proceedings. This works by purchasing a portion of your prospective settlement (or jury award) on a non-recourse basis in exchange for the advance.
