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FREQUENTLY ASKED QUESTIONS
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scroll through all the answers below or you may
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any individual question and go directly
to its answer
- Does the Plaintiff have to repay the money received if he loses the case?
- Is the money received a loan?
- How much money can the Plaintiff receive?
- When can the Plaintiff get the money?
- What are the Qualifications for receiving the funding?
- What can the money be used for?
- What type of cases qualify for this funding?
- Is this funding legal in all states?
- How does the funding source make sure they get their money back?
ANSWERS TO QUESTIONS
- Does the Plaintiff have to repay the money received if he loses the case?
NO. These are all non-recourse transactions. If the
Plaintiff does not win the case he does not owe any
money at any time. The Plaintiff is still required to strive to win his
case just as though no presettlement money was advanced.
- Is the money received a loan?
This transaction is not a loan. There is no interest charged
on the advance given to the Plaintiff, only fees. There are no
periodic payments due. The Plaintiff is only required to pay back
the money advanced and fees accrued if and only if he wins his case.
- How much money can the Plaintiff receive?
Every case is different, but generally the funded amount is
limited to 5-20% of the what the funding source feels the case
will settle for. For some larger cases on appeal the percentage
may be a little higher.
- When can the Plaintiff get the money?
Typically, and of course no case is really typical, funding is
not available until the case is at least six months old. It
is during this time that discovery is taking place and there
must be enough information for the funding source to make a
reasonable estimate of the likely outcome of the case.
A major exception to this rule is where there is no doubt who
was at fault in the case and how much damage was done. For
example, if somebody was legally stopped at a traffic light
and was hit by a drunk driver and if the Plaintiff needed
money to cover medical treatment that was outside of his
insurance coverage, the funding source can often fund much more quickly.
Once a case is "seasoned" the actual decision making and funding
process is relatively quick. Funding can happen in as little as
seven days following receipt of the relevant information which is
easy and quick to provide. The wide majority of cases are funded
within seven to fourteen days depending on how prompt the funding
source receives the response to a simple form from the attorney on the case.
- What are the Qualifications for receiving the funding?
The Plaintiff must be represented by an attorney and need money
prior to the settlement to cover some financial hardship.
Usually, this hardship comes about because the client is injured
and is not able to work to collect his salary. These bills could
be everyday living expenses, expenses directly related to the
injury like medical expenses or the replacement of an automobile
that was damaged. Most often, the hardship involves people
using the money to avoid foreclosure, eviction proceedings, or
the repossession of their car.
Generally, the case must involve an expected settlement of at
least $20,000 to be considered by most of the funding sources.
- What can the money be used for?
The money is primarily designed to cover financial hardships
like those listed in question #5 but the money can also be
used to cover some of the costs incurred by the attorney on
the case. Typical costs covered could include attorney fees,
expert witness testimony, and expert witness research.
- What type of cases qualify for this funding?
The most common cases funded are personal injury cases and
the most common within that category are automobile accidents.
However, some other cases that have been covered in the past
include medical malpractice, workman's compensation, wrongful
death, job discrimination, nursing home abuse, class action
suits, product liability claims, and settled cases waiting payoffs.
- Is this funding legal in all states?
Most states have accepted the legitimacy of this funding source
for financial hardships, however there are still some states
that have precluded this funding. At the time of this writing
Pre-Settlement Lawsuit Financing is not available in Louisiana, Maine
and probably Ohio.
Update: Cases have been successfully
concluded in Louisiana and Maine so Ohio is the only state that is
still questionable
- How does the funding source make sure they get their money back?
The money advanced is secured with either a lien or a letter
of protection with the attorney and signed contracts with the
client. This obligation is "behind" the attorney's lien and
medical liens if applicable. Obviously, the funding source
is taking a significant risk in these funding situations.
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