Non recourse funding.
Plaintiff funding.
Operating nationally and internationally, Baker Street Funding serves institutional clients and personal injury plaintiffs get the funds they need fast. We seek to deliver to our clients leading market results.
How legal funding compares to other financing options.
Legal funding is not the only available option for plaintiffs. Before applying for legal funding, many plaintiffs approach more traditional banking institutions looking for a liquidity solution. The main difference between legal funding and other traditional banking solutions is recourse and payment schedule. With most traditional options, there is no option for non-recourse funding. Meaning that any approval is based on credit history and income profile. Many plaintiffs who find themselves out of work due to an accident do not qualify for a loan because their credit and income have been impacted by the accident. With traditional bank loans, there is a repayment period that could start as quickly as 30 days from taking out financing. This means that the plaintiff will have to make monthly payments until the debt it satisfied.
This is why most plaintiffs find legal funding as their preferred financial solution. There are no monthly payments and no risk of paying back the funds if their case does not settle favorably.
Not a traditional loan.
Lawsuit funding is a non-recourse transaction. This means that unlike a traditional loan, there are no monthly payments and no obligation to repay if the case does not settle favorably. There may be fees associated with an advance but all fees are paid upon successful settlement of the claim.
The cost of plaintiff loans.
The short answer is yes, plaintiff funding is expensive. Because of the risk associated with losing their investment, legal funding companies charge a high rate of return on their advances. While some people are under the impression that you will have to pay back double or triple the amount you take out, the truth is that most funding companies charge an annual interest rate of 30-40%. One thing to consider is that these funds are not payable if the case does not settle.
Is plaintiff settlement funding right for your client.
Plaintiffs that can not access traditional financing and are in dire need of cash while their case settles should strongly consider settlement funding. While it is expensive, the risk of having your case settle unfavorably and you still owing money is eliminated. Legal funding should be a lifeline to help plaintiffs pay daily living expenses and case cost expenses. It should be a plaintiffs last resort not the first place they look.
The 2 main types of legal funding for plaintiffs.
The two main types of legal funding are pre-settlement and post-settlement funding. In pre-settlement funding, your case is still being litigated and there have been no accepted offers of settlement. In pre-settlement cases, Baker Street Funding normally releases up to 10% of the gross estimated settlement value of the case. That means we will advance $10,000 for every $100,000 we think the case is worth. In post-settlement funding, there has been an offer for settlement and the plaintiff has accepted it. We normally release up to 50% of the net value to the plaintiff or $50,000 on a case in which the plaintiff will receive $100,000 after all attorneys fees and liens.
The benefits.
There are both costs and benefits when taking out a settlement advance on your case. The interest in a settlement advance can be high compared to traditional loans, which leaves less money for the client to receive when the case settles, but if that money is needed now to pay litigation in corporate litigation cases, bills or for living expenses for personal injury plaintiffs, then the costs greatly justify the means.
Deciding if a plaintiff loan is the right choice.
If your client has looked at traditional financing options and they are unable or unwilling to use them and are in need of cash now to fund basic living expenses, then settlement funding is something you should greatly consider. At the end of the day, it is their decision whether to pursue a settlement advance or wait for the settlement check to arrive. Hopefully, now you know enough to make an informed decision on whether settlement funding is a good fit for your own unique situation.