Lawsuit funding has proved to be a valuable resource for financial-starved plaintiffs struggling to cover expenses as they wait for pending litigation settlement. This legal loan is useful to respondents and to the lawyer in charge of the ongoing case.

5 Things You Need to Know About Lawsuit Funding

1.  How Lawsuit Funding Work

After filing a personal injury lawsuit, the lawyers at Legal Bay will counsel you on applying for the loan with a lawsuit lending company. The lending firm evaluates your case to ascertain the expected compensation if you win the case or negotiate a settlement. 

 The lender will offer you a specific sum of money instantly if you agree to pay that exact amount with a small interest fee out of your compensation. Usually, you’re not required to make any payments before the case outcome. You’ll pay the lender from the reward you get from the lawsuit proceeds or negotiation settlement.

2.  How You Get Approved

The first step involves filling out a preliminary application with the lending company. You’re required to submit contact information, your attorney’s name and phone number, and the type of case you’re filing.

 After completing the application, the lender will immediately contact your lawyer to request legal documents to evaluate your case. The lender will assess the merits of your claim, and if satisfied, you’ll be approved and receive a cash advance within days.

3.  The Funding Fee against Your Lawsuit Proceeds

The lawsuit funding interest rates can be around 2% to 4% per month. While this sounds like a reasonable amount, then annual percentage rates will run between 27% and 60% or even more. 

 In case your lawsuit takes years to resolve, you may end up paying back double or triple of the borrowed amount.

4.  Repaying the Lender

You’ll be required to pay the loan from the court judgment or negotiation settlement. When you obtain a favorable ruling from the court or reach a specific settlement with the defendant, you’ll need to pay off certain expenses first.

 These expenses may include:

• The litigation expenses include court costs, copy posts, and process server fees.
• The attorney fee can be ⅓ or ½ of the awarded compensation sum for personal injury cases.
• Medical fees including the services you got from hospitals, doctors, or other medical professionals.

 After paying all the expenses, you’ll then repay the lawsuit lending company from the remainder.

5.  What to Expect When You Lose Your Case or Settle for Less

The good news is that you don’t have to repay the lender if you lose your case. Generally, the lender takes all the risk – the interest rates of a lawsuit funding are higher than other types of loans.

 On the other hand, if you settle for less than anticipated, you’ll not have to pay a higher amount than your settlement amount.

Conclusion

The importance of lawsuit funding is nothing less than reliable financial support during the case process. Unlike other types of loans, you don’t need a good credit score to qualify. This post explains the five crucial things you need to know about lawsuit funding.