A lawsuit funding transaction is the selling of part of the future proceeds expected from a pending litigation.  The plaintiff  in the lawsuit effectively transfers by contract a portion of the case once it is successful.  Part of the transaction is the agreement that the contract will be placed in the file as a “lien” against the future settlement.  In other words, the property must be repaid, with costs, to the rightful owner BEFORE the plaintiff receives any of the settlement.

A lawsuit loan is only one potential lien which may exist in any given file.  Below we discuss some common examples of liens contained in litigation files. Read more »

The answer to the above lawsuit funding question comes up a great deal in day to day business in the litigation financing industry.  More goes into underwriting a lawsuit loan or cash advance than most people realize.  Analyzing case specific fact patterns, applicable laws, insurance issues, complex damages, and a host of other legal dynamics is the job of the lawsuit funding underwriter.  Most professionals in this arena are usually derived from a few occupations.  Below we discuss some of the most common. Read more »

Applicants for lawsuit funding, otherwise known as lawsuit loans or litigation cash advances, have wide and assorted reasons for seeking pre-settlement cash against the potential recovery of their legal proceeding.  In many instances, applicants require funding as quick as possible.  Of course, lawsuit funding companies are in the business to help these individuals and it is in their best interest as well that the transaction take place in a timely fashion.

Unfortunately, many clients are disappointed to experience that the whole process takes longer than expected.  Compounding the problem is promises of “12 hour approvals” and “get your money today” advertisements all over the internet.  That is not to say that no cases are funded in the 12-24 hour time frame.  In fact, lawsuit funding contracts are routinely executed on the same day as the application.  And this occurs each and every day.

The problem is adjusting the applicant’s expectations because not every case is submitted, paperwork received, attorney interviewed, contract drafted and executed, and money disbursed all in one business day.  In prior articles, we discussed some potential obstacles standing between the applicant and a successful funding transaction.  Below, we discuss the attorney’s role in the funding process and how his participation is a necessary prerequisite for anyone hoping to obtain a lawsuit cash advance.  Further, we consider the attorney’s point of view as it pertains to the process of obtaining a cash advance against a case. Read more »

Origination of new legal funding business usually comes in two forms.  Either the client contacts the lawsuit loan company or a lawyer refers one of his clients who need immediate cash against his/her case.  Attorney referrals are a great source of new business simply because the attorney usually understands the funding process and is intimately aware of the steps he needs to take to facilitate the transaction.  Conversely, new business initiated by the client himself sometimes results in the participation of an attorney who is unfamiliar with the lawsuit cash advance industry.  In these cases, attorneys receive “on the job training” in the funding process.

In some cases, attorneys are reluctant to cooperate with their clients wishes.  The reasons for this resistance usually fall under the same few themes.  This article will examine some of these issues in more detail. Read more »

At Fair Rate Funding, we are frequently asked whether we run credit checks in connection with the funding process. The answer to this question is “no”.  However, other “checks” are routinely used by lawsuit loan companies to help in their underwriting.   This post will discuss this topic in a little more detail.

Credit Checks

Credit checks are utilized by lenders to assess the likelihood a loan will be repaid and the terms of the loan followed.  A lawsuit funding transaction is not technically a loan because in the event the lawsuit is unsuccessful, the cash advance does not need to be repaid.  Instead, the funder purchases a portion of the the proceeds of the case, if any.  Because of this, the creditworthiness of the applicant is a non-issue and the credit score not usually a factor in the underwriting process.   However, the applicant’s background may be an issue and must be factored into the decision to fund a particular case. Read more »

In the last article, we examined the historical pricing models in the lawsuit cash advance funding industry.  We also discussed the business dynamics that often change pricing in any business which puts capital at risk for profit.  Specifically, we mentioned how the settlement loan industry evolved from an enterprise charging as much as 10% per month as “interest” on lawsuit cash advances to a business where applicants are routinely “funded” for as little as 15% per six month period.

In this entry, we examine the costs associated with lawsuit funding and analyze them from the perspective of an applicant who is in dire need of cash for whatever reason.  From this angle, we can more accurately assess the costs associated with this type of financial relief – only available for those who have a pending lawsuit.

Since every person’s circumstances are different, weighing the costs in obtaining a lawsuit loan or pre-settlement funding against the future proceeds of an individual’s pending case, can only be accomplished on a case by case basis.  For this reason, perhaps the best way to illustrate the point, is to use a hypothetical example. Read more »

Much is spoken/written about the “costs” associated with obtaining a cash advance against the future proceeds of a pending lawsuit. Otherwise known as a lawsuit loan or pre-settlement funding, many companies offer cash now against the future resolution of a case. The costs associated with these transactions vary greatly. This post attempts a broad discussion of the history of pricing in the lawsuit funding industry.

The lawsuit funding industry was born to address the liquidity concerns of those individuals who were encountering financial difficulties while waiting for their lawsuit to be resolved.  Because many jurisdictions were simply bogged down with thousands of cases, plaintiffs often had to wait months if not, years for their cases to be settled.  Lawsuit funding companies offered clients immediate cash against the future proceeds of the case.  The catch was that the “costs” associated with these transactions were very expensive, at least when comparing costs with other sources of funds. Read more »