What is Litigation Financing?

When you are in a lawsuit, you look forward to the results turning in your favor. When you talk of litigation funding , it is a practice where a third party that is not involved in a case provides funding to the plaintiff involved in the lawsuit. Gaining lawsuit financing depends only on the merit of the case that you are involved in , this is because the person financing the lawsuit needs to be guaranteed of getting back his money with the settlement.

Funding companies look into the cases themselves as the funding is not a loan. It needs to be looked at as an assignment of a portion of the clients should they recover. This is to clearly mean that if a case is lost the money that the lawsuit financing had offered gets lost as well. When it comes to a case being financed, some may question on the ethical nature of a lawyer referring a client to a lawsuit financing party.

The case is ethical if its proven that the lawyer has no interest in the lawsuit financing company or party. To polish off on the ethical requirements, the lawyer should not in any way profit from the transaction that is going to happen. The company that is financing the case should not be involved in the lawsuit in a way that it will benefit if the case is lost by the client. There are benefits that a client gets being referred to the lawsuit financing party. It’s definitely a welcome intervention if a client will secure funding especially if there was no way to raise the money before the lawsuit financing company. Lawsuit companies come in handy especially if the client has no way to raise the money needed to finance the lawsuit that they are involved in . To secure pre-settlement advance, you have to undergo a process but it’s not complicated. One needs to fill an application which will help the company to evaluate the lawsuit.

For the attorneys that are representing the case , any questions that the company might have, it will direct to them for clarifications and answers. The clients waits for a day or two after submission of the case documents to receive a verdict on whether the company will support the case. Should the case be accepted , the attorney will forward a contract to the lawyer representing the case outlining terms and conditions and how they will receive money from the company. In other cases some litigation financing is done on already settled cases. The need to get financing for already settled cases may be motivated by reason of court order approval, insurance companies dragging, Medicare resolutions or other reasons that are time consuming.

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