Lawsuit Loan General Information

March 1, 2024 by Paul Coppola

Why Attorneys are Concerned About Lawsuit Loans

Plaintiff attorneys have legitimate concerns with lawsuit funding since their clients and cases are involved in these financial transactions. In this post, we examine why plaintiff lawyers are concerned with their clients entering into legal loan contracts and how these legitimate concerns are addressed.

Attorney Concerns with Lawsuit Funding Begin with Origination

Origination of new legal funding business usually comes in two forms. Either the client contacts the lawsuit loan company or a lawyer refers a client who needs immediate cash against his/her case.

Attorney referrals are the ideal way to secure funding because the referring attorney usually understands the funding business and can secure the best terms. We discuss the benefits of a lawyer/funder relationship in other posts.

New business initiated by the client is an entirely different animal. Although lawsuit funding requires attorney cooperation, sometimes attorneys are unfamiliar with lawsuit “loans” or otherwise reluctant to participate in the lawsuit loan process.

When attorneys are reluctant to cooperate with their clients’ wishes, the reasons usually fall within the same few themes. Below, we examine some common issues.

Oppressive Terms

To some critics, lawsuit loans are the equivalent of payday lending only with a lawsuit instead of a paycheck backing the transaction. Critics maintain lawsuit loans are predatory lending and exploit plaintiffs when they are vulnerable. Many articles have been written about the costs associated with lawsuit loans. We will not get into that topic in too much detail herein.

Yet, lawsuit loans are not traditional loans, so criticisms regarding cost are perhaps misplaced. Legal funding contracts are non-recourse since repayment is contingent upon a successful outcome. This means the recovery itself must be the source of the repayment, not the plaintiff personally. Lawsuit loans are risky in that any loss is a total loss of the funding company’s investment. This additional risk must be factored into the pricing.

Nevertheless, many plaintiff lawyers have legitimate concerns regarding lawsuit funding costs, since in some instances, the transactions can hinder settlement negotiations. More on this issue below.

It is also important to understand that while the costs are higher than traditional financing options, pricing for cash advances on pending lawsuits has drastically declined in recent years. Moreover, by working with funders directly, the client can save as much as 50% off the cost of the advance since some administrative fees (origination, underwriting and broker fees) can be avoided.

Scope of Representation

Another common attorney concern with lawsuit funding involves the scope of representation. Attorneys are understandably leery of representing clients outside the scope of their retainer agreements. When a client applies for funding, the attorney must balance his client’s interests with his own.

For example, a lawyer agrees to represent a plaintiff who is injured in an automobile accident. As far as the attorney is concerned, his representation begins and ends with the personal injury action. Representing a client as to the nuances of contract law and lawsuit funding contracts may be beyond his level of expertise. Or perhaps the attorney simply does not want to spend his valuable time researching these topics without payment for his services. These are legitimate concerns.

In the vast majority of cases, this potential conflict is remedied because the attorney is normally willing to help his client, and more often than not, discussions about the funding process between the attorney and the funding company will put the attorney at ease.

Funding companies simply want to be repaid if there is a successful resolution to the case. They do not want to hang an attorney “out to dry” if something unforeseen should occur. After all, a lawsuit funding company wants to be a resource for an attorney, not an adversary.

If You Have Any Questions, Call 888-964-2224

WE ARE HERE TO HELP YOU!

Attorney Concerns with Lawsuit Funding in Settlement Negotiations

One of the most common attorney concerns with lawsuit funding is the idea that more liens on a file will result in difficulty settling the case. The thinking is that the client will not want to settle the case if most of the award goes to attorney’s fees, medical or other liens, and repaying the lawsuit loan. This is also a legitimate concern. For example, one can easily foresee a client wanting to “roll the dice” and go to trial if he feels his portion of the award is less than adequate. Trying cases costs money and time so attorneys are likely to resist anything which would increase this possibility.

What is important to realize however is that pre-settlement finance companies do not want a case to go to trial either because almost anything can happen in a courtroom, and often does. Settlements make sense for all parties so funders mitigate the risk of trial by limiting how much lawsuit funding is available on any particular case. More often than not, a conversation with the attorney will quell concerns about this issue. Since the advance amounts are designed to gain a return, they are usually low enough to avoid this problem.

When a case does not yield the expected settlement offer, other tactics can be used to ensure a positive outcome for all parties involved. Professional settlement funding companies will rarely stand in the way of a reasonable settlement especially when something unforeseen (like when plaintiffs die during lawsuits) occurs.

Balancing Plaintiff and Attorney Concerns with Lawsuit Funding

Of course, more attorney concerns with lawsuit funding possibly exist than explored in this post. And attorneys may have a multitude of reasons to discourage their clients from obtaining lawsuit funding. Yet, the above issues repeatedly come up when dealing with these concerns and are routinely resolved through communication and mutual understanding.

If you have any questions regarding lawsuit loans, do not hesitate to give us a call. You will reach a live representative who will be happy to field your questions. Or you can contact us online. We are here to help and are at your service.

Thank you for your interest in pre-settlement funding.

Apply Now

February 27, 2024 by Paul Coppola

Attorneys Use Lawsuit Funding to Benefit Their Practices

Attorneys use lawsuit funding properly by fostering working relationships with reputable lawsuit lenders. These relationships are a valuable asset for your firm.

Since each lawsuit is unique, attorneys sometimes require flexibility from lawsuit lenders to provide much needed liquidity for clients. These funds can be used for any purpose ranging from surgical procedures to daily living expenses.

In this post, we examine the best way to find the best lawsuit funding company, assure the terms of legal funding contracts are fair and transparent and explore how lawyers can best use lawsuit funding relationships.

Understanding Contract Structure and Costs

Almost all lawsuit funding agreements assign property rights in a portion of the future proceeds of pending litigation. The contracts are drafted in this way so the transactions are “non-recourse” and fall outside the realm of traditional loans for purposes of state usury laws.

According to the contract, the lawsuit cash advance is to be repaid from settlement or judgement proceeds and lenders cannot pursue plaintiffs personally for repayment. Thus, if there is no monetary recovery, the advance is not repaid. While percentages and time are factors which dictate repayment amounts, the contingent nature of a successful outcome makes these transactions unique.

While there is a wide range of lawsuit loan pricing methods used by different lawsuit funding companies, the vast majority of advances on pending lawsuits‘ repayment schedules are calculated in one of two ways.

The first way is through a compounding monthly rate. The normal range is 2.5% to 3.5% per month. The second way is by calculating a simple interest rate based on the contract amount. Clients can expect to see a range from 18% -50% every six-months until the case is settled and advance repaid.

All Rates Are Not Equal

You may be surprised to learn that a compounding monthly rate may not be as oppressive as it sounds. In fact, if a lawsuit were to settle within the first 6 months after an advance, the average compounding monthly rate is cheaper than a flat rate calculation. After that time frame, but before 24 months, both rate structures are remarkably similar. Only after 2 years is the compounding effect noticeable.

There are pros and cons to both lawsuit loan rate structures. And although the contractual language of lawsuit funding transactions is not complex, what personal injury attorney wants to spend the time becoming an expert in this field? As attorneys, we cannot be an expert in everything. Couldn’t your time be better spent elsewhere?

The nuances of lawsuit loan contracts are easily grasped when you have a “go to guy” in the lawsuit funding business. A good working relationship with a funder you can trust will save you a great deal of time in the long run.

If You Have Any Questions, Call 888-964-2224

WE ARE HERE TO HELP YOU!

Understanding How Attorneys Use Lawsuit Funding Properly

Lawsuit funding operations design contracts which protect their interests in the event a dispute arises. Obviously, lawsuit funding companies are concerned with repayment of capital. Intelligent lawsuit funding companies are also concerned with creating mutually beneficial relationships with attorneys and their clients. They understand the value of attorney referral business to the extent that it lowers the cost of lawsuit loan case origination.

Smart plaintiff attorneys use lawsuit funding properly when they understand funders’ business needs and balance them with the needs of their clients. For example, consider a personal injury case where the plaintiff was not forthcoming about prior injuries. Once deposed, plaintiff was forced to admit injuring the same body parts in a prior accident. One can expect any settlement offer to be well below what was projected by lawsuit funding underwriters relying on limited information.

The result might be difficulty in settling the case. After all, the lawsuit loan, if paid off in full, will yield virtually no recovery for the plaintiff personally. Meanwhile, the attorney cannot “sell” a reasonable settlement offer to his client who wants to go to trial to see what happens. Of course, the plaintiff is unaware of the costs associated with going to trial. He/she may have read an article online stating a particular injury type is worth over $1,000,000 in settlement.

Faced with the “throwing good money after bad” prospect of prepping for trial, hiring experts and actually picking a jury, attorneys who have existing relationships with lawsuit funders can approach these companies and explain the situation. Although many would not be pleased, professional funding operations understand the value of repeat business and will usually be reasonable if settlement negotiations break down. Having to take a reduction on a single case is far more palatable when that same firm routinely refers clients for funding.

What are the First Steps?

Contact a lawsuit funder about their programs and make sure you get at least a ballpark estimate of the costs. These should include process fees, underwriting fees, application fees, and origination fees, if any. Attorneys should ask questions about how the advance is amortized, when repayment is expected and what exactly are an attorney’s obligations under a typical agreement.

By beginning a dialogue, you will get a feel for whether the funding company is up front and honest with the information you request and a sense of what it will be like to do business with the company in the future. From there, it is just a matter of getting comfortable with the lawsuit loan process and the players.

Choose Fair Rate Funding

At Fair Rate Funding, we want to be a resource for your firm and your clients. We are plaintiff advocates in that we afford litigants the financial support they need to pursue their interests in the court system. We’ve been doing so since 2007.

If you have any questions of any kind about how lawsuit funding can help your practice, please contact us at 888-964-2224. We are here to help and are at your service.

Thank you for your interest in the lawsuit funding business.

Apply Now

February 26, 2024 by Paul Coppola

Delays in Legal System Give Rise to Lawsuit Funding

Sometimes it is appropriate to get down to basics when analyzing an issue. Although we’ve written extensively about the pre settlement funding business and how the market players are filling an existing need, what is rarely discussed is why there is a need in the first place. In this post, we uncover that legal system delays are the origin of lawsuit funding.

The legal system is not perfect. Like all systems, certain problems arise. The good news is that in a free society, market participants can remedy these problems.

Lawsuit delays are a result of limited resources in resolving disputes between parties. They are just one flaw within the legal system. Lawsuit funding seeks to remedy the effects of legal system delays.

In This Post

Delays in Legal System Give Rise to Lawsuit Funding
Legal System Does What it Intends
Speedy Justice
Lawsuit Funding Responds

Legal System Does What it Intends

No one would deny that a legal system designed to resolve civil disputes is a good thing. The alternative might be people taking into their own hands the means to resolve these disagreements. One can easily envision violent altercations as the ultimate form of dispute resolution. In a civilized society, the courts offer parties to a civil dispute an opportunity to resolve it without bloodshed.

Further, a legal system which utilizes well documented regulations and historical precedent builds a foundation to resolve all future disputes in a more equitable fashion. With this foundation, those who make their living navigating the legal system (i.e. lawyers) can learn those standards and help others with this expertise.

The problem with the legal system has never been its inability to resolve conflict. In fact, many, MANY, rules and regulations are in place specifically to deal with potential conflicts and other pitfalls in the process. Most of the time, these were implemented because of the existence of past problems. Ultimately, the system reaches its intended destination – justice.

Speedy Justice

One often cited legal system flaw however, is the speed in which justice is served. While many small disputes can be adjudicated in only a couple of months, the vast majority of cases will not reach their final conclusion for many months and more often than not, years.

Of course, the time it takes from complaint to settlement varies from venue to venue and from case to case. Factors such as the type of case, amount of other cases on the docket, discovery, lining up witness and expert testimony, and coordinating attorney calendars can all contribute to delays in the legal system.

Are Legal System Delays Really Flaws?

Legal system delays are not necessarily a bad thing since many people make a living providing legal services to the public. Certainly the speed of the civil justice system could be increased, but at what cost? Are more judges, clerks, registrars, courthouses, lawyers really what we need? Taxes and borrowing must pay for it. Do we need more of those?

This delay also adds an added benefit of filtering out frivolous lawsuits and/or petty claims because it simply may not be worth the effort for parties to use the system. If too much effort is required, plaintiffs might not be willing to pay the price, especially if the potential reward is limited.

Lawsuit Delays May Cause Problems

For the majority of participants, the legal system in the United States operates as intended. All citizens are allowed access to the courts to rule on disputes between parties. It may take some time, but ultimately the matters are resolved.

For others however, legal system delays are significant flaws and can pose real problems. For example, personal injury plaintiffs, who are unable to work due to injuries, often encounter severe financial distress while they wait out the judicial process. In this situation, any delay in justice can be financially burdensome and uncomfortable.

For years, plaintiffs met this financial stress in traditional ways like taking loans from family members, selling of existing property, credit card cash advances, etc. In the last couple of decades, settlement funding emerged to meet the needs of these individuals.

If You Have Any Questions, Call 888-964-2224

WE ARE HERE TO HELP YOU!

Lawsuit Funding Responds

The lawsuit funding business, which provides liquidity to plaintiffs prior to settlement or recovery, attempts to fill the need of plaintiffs who cannot meet their expenses while they wait out legal system delays. The practice gained momentum in the late 2000’s and is now a legitimate part of the civil litigation landscape.

What are Lawsuit Loans?

Lawsuit loans are financial deals that address the ramifications of legal system delays. They occur when a plaintiff pledges a portion of the future recovery on a pending lawsuit in return for a lump sum amount of cash from a lawsuit lender. Lawsuit loans bridge the financial gap between initiating a lawsuit and its ultimate resolution. They attempt to level the financial playing field between individual plaintiffs and large insurance companies who defend civil actions in court.

How are Lawsuit Loans Different?

Traditional loans imply repayment at some point in the future. Lawsuit loans are not loans in the traditional sense because repayment is dependent upon a successful outcome. That is, if the lawsuit fails, the lawsuit cash advance is not repaid.

Lawsuit funding contract terms dictate that repayment is to be made from lawsuit proceeds only. For this reason, lawsuit lenders cannot pursue plaintiffs personally for repayment. Lawsuit loans are appropriately deemed “non-recourse” funding.

How are They Used?

Medical treatment and surgery loans
Living expenses
Housing
Transportation
Past debts
School tuition
and more . . .

How the Process Works

Before considering non-recourse legal funding, we advise that clients speak with their trusted personal injury attorney to weigh out all of their options.

APPLY ONLINE – The lawsuit loan application process is brief and straightforward. Simply fill out our brief online application or give us a call to get started.
CASE REVIEW – We’ve been in the lawsuit funding business for over 15 years and have decades of legal experience. We need only a few minutes with your attorney to evaluate a case for lawsuit loan approval.
RECEIVE FUNDS – Once approved, a contract is executed and money is sent via overnight check or electronic bank transfer.

Legal Funding and Legal System Delays

As stated above, legal system delays are inherent in the judicial process and are unavoidable. Their effects however, can be minimized in certain circumstances utilizing the power of lawsuit loans. If you are struggling financially due to delays in justice, you may have more options than you realize. If you have any questions regarding legal funding and your lawsuit, reach out to us at 888-964-2224 and speak to a live representative. We are at your service and here to help.

Thank you for your interest in Fair Rate Funding.

Apply Now

September 7, 2023 by Paul Coppola

Understanding the Tax Implications of Lawsuit Loans

Lawsuit loans, also known as litigation funding or pre-settlement funding, provide financial support to plaintiffs involved in pending legal cases. Legal funding loans are designed to help cover living expenses during an often lengthy legal process. However, one common question that arises among lawsuit loan recipients is whether these funds are taxable. In this post, we examine whether lawsuit loans are taxable and consider other relevant issues.

Understanding Lawsuit Loans

Lawsuit loans are non-recourse advances provided by funding companies to plaintiffs who await the resolution of their legal claims. These loans are typically repaid if the plaintiff wins the case or reaches a settlement. If the plaintiff loses the case, they are generally not required to repay the loan, making it a non-recourse arrangement. That is, the lawsuit lender cannot pursue the plaintiff personally for repayment.

Taxation of Lawsuit Loans

The tax treatment of lawsuit loans can vary depending on several factors, including the nature of the loan, the specific circumstances of the plaintiff, and the applicable tax laws. Here are some key considerations when examining whether lawsuit loans are taxable:

Lawsuit Loans are Generally Non-Taxable:

In most cases, lawsuit loans are not taxable income for the recipient. Remember, lawsuit loans are not considered traditional loans. Instead, they are advances on a potential recovery. When you receive a lawsuit loan, you are not required to report the advance as income. In other words, you are not taxed on it.

Further, there are no monthly payments to make since repayment must come from the lawsuit proceeds themselves under the contract. Most lawsuit funders require repayment only if you win your case. If you lose, you owe nothing.

If You Have Any Questions, Call 888-964-2224

WE ARE HERE TO HELP YOU!

Taxes on Successful Recovery

Tax implications can change if you receive a settlement or judgment as a result of your lawsuit. Any monetary award you receive may be subject to taxation, depending on the type of damages awarded and the relevant tax laws in your jurisdiction. Typically, compensatory damages for physical injuries are not taxable, but punitive damages and interest on settlements may be taxable. It depends on the circumstances.

Consult a Pro Tax Advisor

It might be wise to leave the question of whether lawsuit proceeds are taxable to a tax professional. These are highly specialized professionals with an intimate grasp of the law in this area. There is a reason why people consult with tax advisors. That reason is because they are best able to analyze your particular set of circumstances and apply them to the current laws. For more information on this topic, please see this IRS Publication on Settlements and Tax Liability. Remember however that the IRS is a federal agency. There are local and state tax authority rulings to also consider. Bottom line: consult a professional for the proper guidance.

Conclusion

So, are lawsuit loans taxable? Probably not since they are generally not considered taxable income for purposes of the tax code. However, the tax implications can change if you receive a settlement or judgment in your case. To ensure compliance with tax laws and optimize your financial situation, seek guidance from a tax professional who can provide tailored advice based on your specific circumstances. Ultimately, understanding whether lawsuit loans are taxable can be an important issue for plaintiffs wishing to make informed financial decisions during the legal process.

Thank you for your interest in lawsuit funding.

Apply Now

February 16, 2016 by Sales

Soft Tissue Lawsuit Funding Help Injured Plaintiffs

Soft tissue lawsuit funding applications make up a fair amount of lawsuit funding inquiries. A significant percentage of applicants only apply for small lawsuit loans, sometimes less than $1,000. While it may be true that even plaintiffs with very heavy injuries may only require a few additional dollars to meet their needs, the vast majority of these small lawsuit loans occur in connection with “soft tissue” lawsuits.

Defining “soft tissue” is not difficult. The term was originally used to describe “whiplash” type injuries sustained in personal injury lawsuits. Soft tissue essentially means that the injury, although severe, essentially involves a strain or sprain of muscles, flesh and body tissue as compared to broken bones, tears to ligaments, other connective tissue, or other more severe conditions.

Imaging equipment such as x-rays, MRI’s and CT Scanners, can show medical problems which exist under the skin’s surface. Conditions such as ligament tears, herniated discs, and fractures are can be examined by doctors using these mediums. Lawyers, medical experts and insurance adjusters are all able to see the extent these physical conditions objectively.

The use of imaging equipment is good news for plaintiffs who are seriously injured, since these injuries can be diagnosed with accuracy.

Insurance companies label injuries without objective evidence (e.g. x-ray findings of fracture or MRI tears) of injury as “soft tissue” injuries. Essentially, a “soft tissue” injury is one where no abnormality can be found in one of the aforementioned imaging studies.

In the remainder of this article, we examine soft tissue personal injury lawsuits and as they relate to the lawsuit funding process.

“Soft Tissue” Defined

As previously mentioned, a soft tissue injury means an injury involving muscles or other tissue such as the typical “whiplash” injury where the patient suffers muscle strain from trauma. Over the years, insurance companies and their attorneys sought to expand this definition a little further. This expansion can have significant impact on an insurer’s bottom line because some state insurance laws (no-fault states) prohibit filing a suit for soft tissue injuries for the majority of the policies written.

Since Fair Rate Funding is based in the State of New Jersey, let’s use NJ as an example. New Jersey’s “No-Fault” statute was enacted decades ago and was designed to provide protection for injured parties in the form of medical benefits. The trade off was that in order to pursue a claim for pain and suffering, the injured party had to show “objective” evidence of permanent medical injury AND that the injury had a significant impact on his/her life (it should be noted that the insured could opt out of what is known as the “verbal threshold” but at a much higher premium payment).

What is “objective” became an issue at that time and was usually defined by a diagnostic imaging tests like those discussed above. This standard remained in effect for years.

Recently, and not surprisingly, insurers are pushing to include positive imaging findings such as disc bulging and/or herniations into the ‘soft tissue’ box. And in some jurisdictions, insurers have been persuasive. Although a positive finding in an MRI used to meet the “objective evidence of injury” test in the past, defense attorneys are now trying to remove injuries with these types of findings from the pool of compensable injuries.

If You Have Any Questions, Call 888-964-2224

WE ARE HERE TO HELP YOU!

What to Expect When Applying for Soft Tissue Lawsuit Funding

In light of the trend toward less and less coverage for these less severe but still extremely painful injuries, lawsuit funding companies must mitigate this additional risk in variety of ways.

One way is to eliminate lawsuit funding for soft tissue cases completely. In fact, many settlement loan businesses will not consider automobile personal injury lawsuits for funding without a surgery. Others may only consider automobile cases in which an imaging test has a positive finding of abnormality such as a bulge, tear or herniation.

Another way is to limit the funding amount. When approved, a lawsuit with ‘soft tissue’ injuries are generally approved for settlement loans for $1,000 or less.

Lawsuit funding’s mission is to provide financial relief to litigants while they wait for their claim/lawsuit to be resolved. Applicants often request small amounts of money for their lawsuit regardless of the severity of their injury. If even small amounts of funding reach plaintiffs who need this assistance, then the mission is fulfilled.

Regardless, soft tissue lawsuits require the consideration of different issues for purposes of providing lawsuit funding to plaintiffs.

Thank you for your interest in the lawsuit funding – settlement loan business.

February 1, 2016 by PMCESQ

Lawsuit funding, also known as settlement funding or lawsuit loans, are financial transactions in which the plaintiff of a lawsuit sells part of the future proceeds of the case, if there are any. The plaintiff assigns by contract a portion of his/her property rights in the future proceeds and the “funder” offers immediate cash as payment for the transfer. One provision in the agreement is that the contract be placed in the file and paid when the case is settled. Essentially the contract is a “lien” against the future settlement just as an attorney’s contingency fee is also a lien on the file. The idea is that all parties with a rightful claim on some of the settlement be made whole prior to the plaintiff receiving the remainder.

A lawsuit loan is only one potential lien that could be placed in the file jacket of a lawsuit. Below are a few examples of liens contained in litigation files.

1. Attorney’s Fee – Most personal injury plaintiffs represent clients on a contingency fee basis. That is, the attorney is only compensated if the lawsuit is successful. The fee usually ranges from 33% to 40% of the total recovery. This fee represents the first lien on the file and will be the first lien paid by plaintiff’s counsel in most circumstances.

2. Letters of Protection – Similar to the above, letters of protection are usually found in personal injury actions where there is extensive medical treatment. The plaintiff’s attorney will write a “letter of protection” to a doctor who will then provide medical treatment to their client, if needed. The attorney will “protect” the cost of the treatment with the proceeds of the settlement. While it is not certain how letters of protection relate to other liens, such as lawsuit funding contracts, in terms of priority, lawsuit funding companies use the amount of medical treatment and outstanding medical bills as they assess investment risk during underwriting. Often, letters of protection are negotiated down at the time of settlement, particularly if the attorney and medical provider routinely represent/treat the same individuals or the amount due and owing could inhibit settlement negotiations with the defendant’s insurer.

3. Federal Tax Liens – By law, the presence of Federal Tax Liens take priority over other liens in the file. These liens may attach to the proceeds of the lawsuit and possibly directly with the IRS as payment. In some instances, lawyers may be able to compromise these amounts in an effort to induce the plaintiff to accept a settlement offer. Nevertheless, tax liens are factored into the lawsuit funding underwriting process when necessary.

4. Child Support – Most state laws require child support liens be paid out of any lawsuit settlement. Many states mandate that child support be paid before other claims to the proceeds. In other words, a child support claim is superior to a lawsuit funding claim on the proceeds. The reason for this sequence is to protect the welfare of children first. Lawsuit funding operations use the presence of child support liens as a determining factor in whether lawsuit funding will be offered and for how much.

These and all other liens could possibly hinder settlement negotiations because a plaintiff may realize most of his potential settlement will be used to pay creditors. With no incentive to settle the lawsuit, attorneys may find themselves faced with the possibility of having to try the case before a judge and jury at considerable cost.

As a general rule, the lawsuit cash advance business is concerned with liens which take priority over lawsuit funding as a matter of law. Yet the total amount of claims against the proceeds is always considered with regard to the amount of funding available. The consideration of these liens is where lawsuit funding underwriters earn their keep as the appropriate amount of lawsuit funding is always in the best interest of all the parties involved in the transaction.

Thank you for your interest in the pre-settlement funding business.

November 12, 2015 by PMCESQ

Lawsuit Funding – The Advantages of this Financial Life Line

Lawsuit funding is an area of specialty finance in which plaintiffs sell a portion of their lawsuit for an immediate sum. The advantages of lawsuit funding are many and are discussed in this post.

Financial Trouble Needs Solutions

Individuals face money problems for a variety of reasons. Some are unemployed, living above their means and/or any other of the many reasons to be needing additional cash. When financial challenges arise, wise individuals use their means to explore all available solutions.

There’s obviously no shortage of money sloshing around in the economy. Literally trillions of dollars are represented in the total money supply in the United States. For many however, access to these funds may be limited. For example, people with credit problems may have a hard time securing traditional loans. People with few assets to sell are another example.

Lawsuits – a Unique Asset Class

One doesn’t normally think of a civil lawsuit as an asset class but civil cases can be assets just like shares of stock or old sets of golf clubs. Just as a person can sell his stock on the stock exchanges or his used golf equipment on ebay, a plaintiff with a certain type of lawsuit also has a salable asset. The lawsuit funding industry provides a marketplace to sell a portion of this asset to allow plaintiffs to get settlement money early. This is a small, relatively small market but it does allow certain lawsuit plaintiffs to utilize the advantages of lawsuit funding to their benefit.

Lawsuit Funding Background

The lawsuit funding industry came about because plaintiffs needed money to pay their living expenses during litigation. Because many jurisdictions lacked the resources to hear these cases quickly, plaintiffs were often required to endure a long, drawn out litigation process, which could last for years. As a result, cash strapped clients were sometimes forced to accept “low ball” settlement offers simply because they needed the settlement money immediately. Lawsuit settlement funding levels the financial playing field between plaintiffs and well funded insurance companies who defend personal injury lawsuits.

Because litigation loan companies technically purchase a portion of the case, pre-settlement lawsuit funding is an option to all plaintiffs who have a need for immediate cash. Below is a list of the advantages of lawsuit funding.

If You Have Any Questions, Call 888-964-2224

WE ARE HERE TO HELP YOU!

Lawsuit Funding Uses No Credit Checks

Lawsuit funding, also known as lawsuit or settlement loans are not technically “loans”. Accordingly, the creditworthiness of the applicant is not an issue. This is good news for applicants because many suffer from inadequate credit scores. These individuals typically do not have other sources of funds available to them.

Lawsuit Funding is Not Repaid if the Case is Unsuccessful

Likewise, because lawsuit funding is a purchase of the future proceeds of the case, the lawsuit cash advance is considered “non-recourse”. This means that if the case should happen to lose in court, the lawsuit funding is not repaid. This is a benefit for clients because the lawsuit funding company shoulders the risk of loss. If the case loses, the advance is simply written off as a loss by the company and no further collection is allowable under the contract.

No Monthly Payments Required

Unlike many other types of financing, such as credit card cash advances or other loans, another lawsuit funding advantage is that NO monthly payments are required. Instead, once the case is resolved is the only time the funding contract need be satisfied. This is an important advantage to lawsuit funding deals since many plaintiffs lack the monthly cash flow to make periodic payments. Accordingly, income verification, a normal requirement for traditional loan approvals, is irrelevant for lawsuit loans and not part of the approval process.

Lawsuit Funding is Flexible

Lawsuit loans provide flexibility. Although most settlement loan transactions involve personal injury lawsuits, the industry does routinely consider other civil matters for funding. The only per-requisites are:

There is a valid claim
The applicant is at least 18 years old
The applicant is represented by counsel

Unrestricted Use

One of the main advantages of lawsuit funding is that the money can be used at the plaintiff’s discretion. Most plaintiffs use the money to pay living expenses but any worthwhile use of the cash is appropriate. Some common uses include:

rent or housing payments
car or other transportation expenses
school tuition
investments
living expenses
and more

No Cost to Apply for Lawsuit Loans

Almost all lawsuit funding businesses offer free applications. If the case is approved and funded, then and only then is the client required to repay the advance under certain conditions and only when the case is resolved. The industry standard is that the applicant does not have to come “out of pocket” to apply for funding. This makes sense, since the client is out of money to begin with.

Lawsuit Funding Offers Competitive Rates for Preferred Cases

Costs associated with lawsuit funding are often misunderstood. This is due in no small part by the insurance companies and defense bar characterizing lawsuit funding as “loans” when they are in fact nothing of the sort. Although the payback on most advances is calculated with interest, costs vary greatly. Some companies have more expenses and must pass those costs along to the plaintiff. Other companies have more “reasonable” charges. If the plaintiff researches the available options, he/she will be able to find fast, low-interest lawsuit loans at the best possible terms.

Conclusion

The lawsuit funding industry came about because plaintiffs needed money to pay their living expenses while their case was pending. Because many jurisdictions lacked the resources to hear these cases quickly, plaintiffs were often required to endure a long, drawn out litigation process, which could last for years. As a result, cash strapped clients were sometimes forced to accept “low ball” settlement offers simply because they needed the settlement money immediately. Lawsuit settlement funding seeks to level the financial playing field between plaintiffs and well funded insurance companies who defend personal injury lawsuits.

Although it is difficult to compare liquidity solutions for people in a financial bind, most available options contain good and bad attributes. The advantages of lawsuit funding may very well fit into an individual’s needs. Since every personal situation is different, each individual is in the best position to decide for himself what is in his own best interests.

Thank you for your interest in the advantages of lawsuit funding and the lawsuit settlement loan business.

Apply Now

May 29, 2015 by PMCESQ

Lawsuit settlement funding companies field hundreds of questions each day. One frequent question asked by plaintiffs is “Why do lawsuits take so long to finally a settlement?”

Of course, there may be many reasons. One major reason relates to the complexity of litigating a personal injury lawsuit. Indeed, both plaintiffs and defendants must jump through many “hoops” in order to prove or defend a lawsuit.

Lawyers attempt to represent the best interests of their clients and navigate the applicable laws and rules in order to protect them. They know what the procedures are and follow the rules to move things along as quickly as possible. Without attorneys, plaintiffs would be lost in a sea of rules and regulations, much of which they could not possibly understand without proper training.

Typically, lawyers meet with their clients, then communicate with the other side’s attorney. After investigation, the lawyer and client will decide what course of action to take – one of which is whether to file a formal complaint or to try to settle without going through the court system.

If the plaintiff decides to file a complaint, the fun has just begun. In most civil actions, such as personal injury cases, court rules call for the parties to exchange pertinent information about the case. This is the part of the lawsuit known as “discovery” and could take years to complete depending on the type of case, length of treatment, etc.

In some personal injury cases, a judge sets forth a schedule of deadlines. Each one represents an important step that must be followed. Most of the time, these dates are anywhere from 30 to 60 to 90 days apart. During the process, both parties answer written questions asked by the other side called interrogatories. They must be answered truthfully and by a deadline. After that, lawyers are allowed to talk to witnesses for the other side, but only with the other attorney present. These sessions are called depositions and they are often delayed due to the scheduling conflicts of attorneys, clients, and/or expert witnesses.

Sometimes lawyers disagree about different procedures they must follow. This can result in another delay because matter must be presented to a judge for a decision. In some jurisdictions, it could delay the proceedings several months just to present the specific issue to the court.

Once discovery is complete and as the trial date approaches, the parties attend a special meeting called a pre-trial conference. The purpose of this meeting is to map out a how things will proceed. Many final issues as to the admissibility of evidence for example, are decided at this time.

Afterwards, the trial ensues and will most likely take a least a week to decide. Then post trial motions are heard and depending on the circumstances, an appeal may be heard, since both parties have the right to appeal.

Even when all of these steps are concluded, there is a certain amount of time that must pass before plaintiffs receive their money. Sometimes the recovery is paid in a lump sum. Other times, it is structure to be paid in installments.

Lawsuit Settlement Funding Bridges the Gap

With all of the intricacies of litigating lawsuits, it is no wonder why settlements take more time than one would expect. One question naturally arises from this process: What are litigants to do if they encounter financial difficulties while the case progresses?

Plaintiffs often find other means of financial support. One such solution is lawsuit settlement funding.

Lawsuit settlement funding is a financial transaction where a plaintiff sells a portion of the future proceeds of his/her lawsuit in exchange for cash now. When the case is settled or otherwise successfully resolved, the lawsuit settlement funding is repaid to the funding company.

Lawsuit settlement funding should not be confused with a loan, although sometimes lawsuit settlement funding is referred to as “lawsuit loans” or “settlement loans”. The term “loan” implies that the money must be repaid at some point in the future.

Alternatively, the lawsuit cash advance (lawsuit settlement funding) is non-recourse, which means that if for ANY reason the lawsuit is not successful, the lawsuit settlement funding is not repaid.

Clearly, lawsuits can take time. When plaintiffs need lawsuit settlement funding to meet financial obligations, Fair Rate Funding is there to help. When you qualify for a settlement loan, we provide you with money. After the trial is over, or if the case settles during the litigation process, the money is repaid. There are absolutely no up front costs to pay and no restrictions on the money’s use.

Thank you for your interest in the lawsuit settlement funding business.

September 4, 2013 by Sales

Lawsuit Funding NJ of Soft Tissue Cases

At Fair Rate Funding, we process over one thousand inquiries each month. Our clients request funding amounts ranging from $1,000 to $400,000. Also, we routinely receive applications for lawsuit funding amounts of less than $1,000. Although some plaintiffs with “heavy” cases may only need a few bucks, the majority of our clients who are approved for less than $1,000 are involved in personal injury lawsuits with “soft tissue” injuries. Thus, if you live in NJ, these applications are for New Jersey soft tissue funding.

Defining Soft Tissue in New Jersey

How to define a soft tissue case has changed considerable throughout the years. The term was originally used to describe “whiplash” type of injuries sustained in personal injury lawsuits such as automobile accidents. Soft tissue was used to describe an injury which only involved muscles, flesh and body tissue such as a bruise, sprain or muscle spasm. When comparing this type of injury with tears to ligaments, bone fractures, or other more severe conditions, soft tissue injuries were so categorized so as to minimize their severity.

The use of imaging equipment such as x-rays, MRI’s and CT Scanners, increased the accuracy in which injuries are diagnosed. Conditions such as ligament tears, herniated discs between the vertebrae, fractures and other conditions are all objectively seen by doctors, lawyers and insurance companies through the use of these incredible machines.

In response, insurance companies took the liberty to label injuries without objective evidence (e.g. a positive x-ray for fracture) of injury as “soft tissue” injuries. Generally, and as it pertains to orthopedic injuries, a “soft tissue” injury became defined as injuries where no abnormalities are found on any objective imaging study.

Redefining “Soft Tissue”?

As stated above, a soft tissue injury historically meant an injury involving the muscles and excluding more severe injuries such as those that can be seen on an imaging study like an MRI. Over the years, insurance companies and their attorneys tried to expand this definition. Currently, defense attorneys and their clients routinely attempt to include such positive findings disc bulging and/or herniations into the ‘soft tissue’ definition. The argument being that even though it comes up on the study, the injury is not severe.

For example, in no-fault auto insurance states such as New Jersey and New York, a positive finding of disc bulging in an MRI met the “objective evidence of injury” test in the past. Presently, defense attorneys attempt to remove injuries with these types of findings from the pool of compensable injuries. In many instances, this endeavor has been successful with many local judges dismissing cases despite positive diagnostic findings.

This is particularly troublesome for personal injury lawsuits with limited injuries and treatment since dismissing a case removes the prospect of trying the case before a jury. Instead, plaintiffs and their attorneys must weigh the cost of fighting the dismissal on appeal with any expected settlement. In some instances, appealing a dismissal is simply not worth the additional time and effort.

What to Expect When Applying for New Jersey Soft Tissue Funding

Because there is more limitation on these painful injuries, lawsuit funding operations must adjust their approach to help mitigate the additional risk.

One such adjustment is to eliminate the funding of soft tissue cases altogether. Many lawsuit settlement funding businesses simply do not consider personal injury lawsuits involving slip and falls, or other premises liability injuries, without a surgery. Some lawsuit funding companies only consider automobile cases which have a positive finding of abnormality on a MRI or CT Scan and some additional treatment such as extensive physical therapy, if there is no surgical intervention involved.

Another adjustment might be limiting the settlement loan amount. When approved, NJ soft tissue funding generally involve $1,000 or less.

The mission of lawsuit funding as an industry is to provide financial relief to those unfortunate plaintiffs who face financial pressure while their lawsuit is pursued in the court system. Applicants often request small amounts of funding against their lawsuit, regardless of the severity of their injury. Small lawsuit funding amounts satisfy this mission as well provided the risk in providing them is adequately calculated.

Thanks you for your interest in New Jersey soft tissue funding.

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