Overcoming Attorney Lawsuit Loan Objections
Attorneys and defendants alike may raise various objections to lawsuit loans, also known as legal funding or litigation financing. These attorney lawsuit loan objections often center around ethical concerns, potential conflicts of interest, and financial impact. In this post, we examine common attorney lawsuit loan objections.
Lawsuit Loan Application and Approval Process
The process of obtaining a pre-settlement loan is fairly simple. The steps are as follows:
- Plaintiff (applicant) completes a Quick Application or calls a funding company.
- The company contacts the plaintiff to pre-qualify the case for funding.
- With your approval, the funding company contacts the attorney’s office and gathers the necessary paperwork.
- Once received, lawsuit funding underwriters review the documents and contact the attorney if more clarification is needed.
- Once approved, a contract is prepared for execution.
- When the contract is returned, money is sent via electronic funds transfer (EFT) or overnight courier.
Most applicants avoid attorney lawsuit loan objections at the time of application. Most objections actually arise while companies attempt to “chase the paper” during the lawsuit loan process. In other instances, like when terms are discussed, objections occur a little later down the line.
Why Attorneys Sometimes Object to Funding
Attorneys generally respond favorably to clients’ lawsuit funding requests. Occasionally, attorneys have lawsuit loan objections and are reluctant to participate. The reasons can vary but mostly fall within the discussion below. Generally, attorneys object to lawsuit funding if it affects the flow of their businesses. There are always issues that throw a wrench into the settlement/litigation process. Lawyers generally want to avoid these issues if at all possible.
The most important thing an applicant can do is to identify and understand potential attorney lawsuit loan objections. Once understood, plaintiffs can better respond and put their attorneys at ease. A list of objections includes:
Excessive Interest Rates
Lawsuit funding opponents often point to higher interest rate charges as compared to traditional loans. Over time, lawsuit funding contract payoffs can double or even triple in certain instances. If paid in full, these amounts can significantly reduce a plaintiff’s settlement proceeds. In some instances, payoff amounts can hinder settlement negotiations since clients will receive very little compensation when all expenses/liens are paid.
The good news is that competitive settlement loan cost is cheaper than ever. Plaintiffs can expect to repay approximately 36% per year in charges from reputable lawsuit loan companies. Clear disclosure of terms and caps on interest rates also mitigate concerns, and plaintiffs should ideally shop around for the best terms.
Conflict of Interest
Lawsuit loans can create a conflict of interest between attorneys and their clients. This issue is of particular importance in the realm of class action lawsuits where attorneys owe a duty to all the members of the class, not just the lawsuit loan applicant. In some instances, class action attorneys will not cooperate with funding companies for this reason.
This is a tricky one because there is legitimate conflict of interest argument to be made. If the attorney digs in his/her heels on this, it is unlikely an applicant will obtain funding. Remember, attorney cooperation is the name of the game in lawsuit funding approvals. Not only does an applicant need a contingency fee based attorney, but that attorney must also be part of the process.
Lack of Regulation
Another attorney lawsuit loan objection involves the industry’s regulation. The legal funding industry is not uniformly regulated in the United States as states are free to adopt their own policies regarding the practice. Lawsuit loan opponents suggest this lack of oversight exposes plaintiffs to predatory lending practices.
Applicants can respond to this objection however. Some states have introduced regulations. In others, many litigation finance companies adhere to industry standards and lawsuit loan best practices to protect consumers and legitimize the business. Predatory practices are a legitimate concern in unregulated businesses. Yet lack of regulation allows plaintiffs to shop for the best deals, and in some instances, negotiate better terms than would otherwise be available.
Settlement Negotiations
Sometimes, plaintiffs may end up with a much smaller portion of the settlement than expected, once legal fees, costs, and lawsuit loan repayment are deducted. Attorney lawsuit loan objections regarding their inability to settle cases for reasonable offers are a legitimate concern. This is because sometimes cases yield lower settlement offers than originally expected.
Consider a personal injury case where there was an undisclosed prior injury which was uncovered during litigation. Attorneys can justifiably expect a lower settlement offer and plaintiffs might be surprised to realize most of their settlement will go toward repaying an advance. Under this scenario, a plaintiff might be willing to refuse the offer and “roll the dice” at trial. This makes logical sense.
But trials cost attorneys time, money and carry more risk. Settlements make sense for all parties most of the time because anything can happen at trial – and often does. Risking the expense of trial is generally not a great strategy when a legitimate offer is on the table.
Settlement loan companies encounter this situation as a regular part of the business. They are in business to remain in business and will generally not stand in the way of a settlement. A simple call to the funding company normally remedies this attorney lawsuit loan objection. Once the situation is explained, attorneys might be surprised at the flexibility funding operations have in negotiating payoffs.
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Resolving Attorney Lawsuit Loan Objections
Attorney lawsuit loan objections are important for both attorneys and clients to consider, and managing these concerns through transparent communication and ethical practices is essential to easing attorney concerns about lawsuit loans. Understanding the way lawsuit loans work is the first step in this process. Only then can applicants address attorney objections accordingly.
More About Fair Rate Funding
Fair Rate Funding funds various lawsuit loan case types in response to legal system delays which plaintiffs often face. We give financially-distressed plaintiffs a portion of their future compensation now so they can pay housing costs, medical bills, and other essential payments. This offers the ability to endure the litigation process and secure just compensation.
Since every case and financial needs are unique, each is evaluated on its own merits. Once approved, we make an offer in which we outline the deal in clear, easy-to-understand language. There are no hidden fees, and we charge only a low, simple, non-compounding interest lawsuit loan rate. You can have money deposited into your account within 24 hours of signing. There is no credit check, income verification, or asset evaluation.
Many lawsuit loan alternatives exist, yet some of their shortcomings are substantial. If you are a plaintiff and need immediate cash you should explore all your options. If you want to learn more about lawsuit loans and other alternatives, please contact us online or give us a call.
When you reach out, a live representative will help you and answer all your questions. At Fair Rate Funding, we want our clients to be well informed. That is why we write these articles. If you have any questions, give us a call today. We are here to help and are at your service.
Thank you for your interest in Fair Rate Funding.
