How Lawsuit Loan Companies Get Cases
Originating new cases is the life blood of every legal operation. Lawyers are always in search of new clients. The same can be true of legal funding operations. In this post, we focus on legal funding case origination and explore how the lawsuit funding companies originate new business.
Lawsuit Loans Originate From Need
Lawsuit loans are an immediate liquidity solution for plaintiffs who need cash to keep up with expenses while involved in pending lawsuits. Plaintiffs sell a portion of their settlement to lawsuit lenders who provide immediate cash in return – often in as little as 24 hours. It might come as a surprise a market exists to sell lawsuit proceeds in advance.
Legal system delays are common across the country. The lawsuit funding market evolved from plaintiffs’ need to “keep the lights on” while they endure a sometimes long and drawn out litigation process.
Legal Funding Case Origination Types
Fair Rate Funding began in 2007 and quickly became a leader in legal funding case origination. At the time, the business was fairly new. Currently, lawsuit funding is a thriving business serving the needs of plaintiffs.
Most legal funding case origination is derived from 3 sources. These include cases directly from plaintiffs themselves needing financial support; cases which are sent to funding companies through brokers; and cases referred directly from plaintiff attorneys. We examine each of these 3 sources in more detail below.
Plaintiff Direct Case Origination
Plaintiff case origination arises from direct marketing efforts to consumers. Television commercials, internet advertising, search engine optimization efforts, email marketing and other methods all drive customers to inquire about lawsuit loans. Plaintiffs contact the best lawsuit loan companies through email, online submission forms or direct phone calls.
Once a plaintiff contacts the lawsuit funder, they are put through the legal funding application process. First they are pre-qualified for lawsuit loans. This means the plaintiff is screened for lawsuit loan case types and information is entered into a content management system (CRM).
From there, the case runs through the steps of funding. These are:
- Document gathering
- Underwriting
- Approval
- Contract execution
- Funding
Once a plaintiff gets a lawsuit loan approval, contracts are drafted, executed and returned to the lender. At the time of “funding”, money is sent via overnight courier or electronic bank transfer.
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Legal Funding Case Origination Through Brokers
Another common way lawsuit funding businesses receive fundable lawsuits is through lawsuit funding brokers. These brokers are in the business of legal funding case origination and source fundable lawsuits in multiple ways.
Although most lawsuit funding brokers are not direct lenders of lawsuit loans, they perform a valuable service in the lawsuit funding industry. First, they have extensive experience in the industry and are able to guide applicants through the lawsuit loan process. Second, they have access to multiple funding companies which may help in a myriad of ways. Third, because their efforts focus solely on the client and not on the lawsuit loan process as a whole, lawsuit loan brokers are able to give plaintiffs a level of service that far exceeds many direct lenders.
From the perspective of lawsuit funding companies, brokers offer pre-qualified lawsuit loan applicants at no upfront cost. That is, brokers are paid only if their cases are funded. This saves lawsuit lenders the cost of legal funding case origination and the time it takes to pre-qualify applicants.
Attorney Referrals
The last common legal funding case origination strategy is marketing directly to contingency fee attorneys for legal funding referrals. Remember, most state attorney ethics rules prohibit lawyers from advancing money to their clients. Many did so anyway so that their clients would not search for a lawyer who was willing to break the rules.
Lawsuit funding made things easier since clients’ requests could simply be forwarded to a reputable funding company for help. Clients could receive advances on pending cases without having to jeopardize attorney ethics. So long as rates are low and terms fair, all parties benefit.
Clients get the cash they need, attorneys avoid ethics violations and lawsuit funding companies save on the cost of legal funding case origination through traditional marketing efforts. Further, since attorneys also benefit from lawsuit funding, they know lawsuit lenders prefer relationships with referring attorneys and they are more likely to cooperate when a lawsuit fails to meet settlement expectations.
Legal Funding Case Origination Takeaways
Above we discussed the traditional ways lawsuit funding companies originate new business. Although each method differs in form, funders, attorneys and clients all benefit from lawsuit loans.
If you have any questions regarding case origination or lawsuit loans in general, please do not hesitate to contact us or give us a call at 888-964-2224. We are here to help and are at your service.
Thank you for your interest in Fair Rate Funding.
