How to Find a Reputable Lawsuit Funding Company
Finding a reputable lawsuit funding company can seem like a daunting task. After all, a great deal of media coverage labels lawsuit funding as a predatory practice designed to take advantage of injured plaintiffs. The reality is that injured plaintiffs need money but often cannot qualify for traditional loans. Lawsuit loans are the free market’s response to this need.
Nevertheless, lawsuit loan criticism is not entirely unwarranted. Lawsuit funding exists in a free market where participants are allowed to charge whatever they want. Plaintiffs are free to refuse terms that are disagreeable and to search for better deals. In this post, we examine how to find a reputable lawsuit funding company who serves clients’ needs at fair terms.
Lawsuit Loan Background
To find a reputable lawsuit funding company, it is helpful to understand the lawsuit funding business. Lawsuit loans are the advancing of money to plaintiffs (often injured) prior to settlement. That is, plaintiffs receive a portion of their potential recovery before the lawsuit concludes. In return, plaintiffs agree to return the lawsuit cash advance on a pending case plus additional money to compensate lawsuit lenders for their services.
Lawsuit funding contracts are specialty finance transactions to the extent they use potential lawsuit proceeds as “collateral” for the advancing of money. They differ from traditional loans because repayment must come from the lawsuit and not from the plaintiff personally according to the contract terms. This means that if the case is unsuccessful, the lawsuit loan is not repaid. For these reasons, lawsuit loans are referred to as non-recourse advances.
Also important to remember is that many states leave lawsuit funding unregulated. Major population areas of California, New York, New Jersey and Florida govern settlement loans through established contract law and not through regulatory action. This means that lawsuit lenders can charge whatever they wish for their services. Thus, shopping for lawsuit loans is very important.
Reputable Lawsuit Funding Company Traits
Although the business is left unregulated in many jurisdictions, the lawsuit funding business is not without its governing principles. The invisible hand guides the actions of many market participants as they compete to scale their business models. Lawsuit loan companies must therefore put their best foot forward in the marketplace if they want to capture more business. Below we discuss commons traits possessed by reputable lawsuit funding companies.
Transparency
A reputable lawsuit funding company is transparent about its terms, fees, and the lawsuit loan process. Good lawsuit funders answer all questions upfront and honestly, including questions regarding payback amounts and other contractual details. They are communicative, approachable and able to be reached via email or telephone. Clear and easy-to-understand information about the funding agreement is always available, ensuring clients understand all the details before signing.
Fair Rates and Fees
Reputable legal funding companies offer competitive lawsuit loan rates that are in line with industry standards. While some companies charge as much as a client will let them, others offer a “fair rate” lawsuit loan which leaves plenty of settlement money left over after attorneys’ fees and other lawsuit liens are repaid. In this way, lawsuit loan costs remain manageable and all parties benefit.
Reputable Lawsuit Funding Companies Use Ethical Practices
The best settlement loan companies adhere to ethical standards in all aspects of their business operations. This includes treating clients with respect, maintaining confidentiality, and avoiding any deceptive or misleading practices.
Professionalism
Reputable lawsuit funding companies maintain a high level of professionalism in their interactions with clients and attorneys. They have knowledgeable lawsuit funding staff who are courteous, responsive, and committed to providing excellent customer service. At Fair Rate Funding for example, clients who give us a call speak to a live representative. They do not have to “press 1” for new clients, “2” for underwriting, etc. Instead, a live representative answers the phone and directs your call if needed. This type of professionalism is indicative of the most reputable of lawsuit loan businesses.
Positive Reviews and References
Look for companies that have positive reviews and testimonials from satisfied clients. You can also ask for references from attorneys or other professionals who have worked with the company in the past.
Flexibility
A reputable funding company understands that every case is unique and may require customized solutions. They are flexible in their approach and willing to work with clients to meet their specific needs. Thankfully, lawsuit loans exist in an unregulated marketplace, where lawsuit lenders can use their creativity to help plaintiffs in need of financial support.
Regulatory Compliance
Some jurisdictions regulate lawsuit loans for their citizens. Reputable lawsuit funding companies comply with all relevant laws and regulations governing the lawsuit funding industry. These might include licensing requirements, consumer protection laws, and regulations related to interest rates and fees.
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Reputable Lawsuit Funding Company Terms
Although many states allow the free market to regulate lawsuit funding industry practices, reputable lawsuit funding companies understand that helping clients is good business. When businesses compete for fundable lawsuits, they are offering their best terms into the marketplace. Below, we examine common terms offered by the most reputable lawsuit funding companies.
No Upfront Fees
Legitimate lawsuit funding companies will not require any upfront payment for their services. After all, plaintiffs are already in a financial bind due to lawsuit delays. If the company you’re considering required an upfront application or due diligence fee, keep shopping. Charging upfront fees is not appropriate and not part of lawsuit funding best practices. Reputable companies typically do not charge any upfront fees and only collect their fees if and when the case is settled successfully.
Competitive Rates
Reputable lawsuit funding companies are in the business of helping plaintiffs, not gouging them. The best companies are upfront and clear about what lawsuit loans cost and how lawsuit loan repayment is calculated. Lawsuit loan rates and fees are communicated openly and not held in secret until the contract appears, at which time some plaintiffs who passed through the lawsuit loan process, will simply accept oppressive terms out of convenience.
Also look for non-compounding rate calculation for lawsuit funding contracts. How repayment is calculated can mean thousands of dollars in savings over the life of a lawsuit loan.
Minimal Fees
Charges for all types of financial transactions are common. Car loans and mortgages have “loan origination” or “processing” fees. So do financial transactions involving business purchases or other debts.
While lawsuit loans are not actually loans in the traditional sense, contract fees do appear on most agreements. The trick is to look for the lowest fees available. This is not as hard as it might sound however, since reputable lawsuit funding companies will rarely charge outrageous fees for their services.
Finding a Reputable Lawsuit Funding Company
Above we discuss what reputable lawsuit funding companies regularly do in their business practices. There are certainly pros and cons of getting settlement money early through lawsuit loans. If you have any questions or want to know if you qualify, simply pick up the phone and give us a call. You’ll reach a live person during business hours who can answer your questions.
Or you can contact us online for more information. Fortunately, finding a reputable lawsuit loan company is doable and well worth the effort. Give us a call today. We are here to help and are at your service.
Thank you for your interest in Fair Rate Funding.
