Understanding Litigation Funding
There are two sides to each story but the fact is both the two parties that are involved in a lawsuit hopes that the case goes their way. Litigation funding or financing is a practice where a third party not involved in the lawsuit provides funds to the plaintiff involved in litigation. However the financing is provided depending on the merits of a pending case as the person providing the funding needs to get their money back.
Funding companies look into the cases themselves as the funding is not a loan. It is better to look at a lawsuit financing as an assignment of the portion of the client in an event that they win the case that is at hand. This is to clearly mean that if a case is lost the money that the lawsuit financing had offered gets lost as well. This may make people question the ethical position of attorneys referring clients to lawsuit financing company.
The case is ethical if its proven that the lawyer has no interest in the lawsuit financing company or party. It has to be established beyond any reasonable doubt that the attorney is not going to benefit from the transaction that is underway. The lawsuit company should also not be involved in the lawsuit in anyway. There are benefits that come with clients being refereed to litigation finance companies . If a client gets to secure financing from a source that they had not anticipated , it will definitely ease the burden. Lawsuit companies come in handy especially if the client has no way to raise the money needed to finance the lawsuit that they are involved in . To secure pre-settlement advance, you have to undergo a process but it’s not complicated. One needs to fill an application which will help the company to evaluate the lawsuit.
The litigation funding company will weigh the merits of the case and if any questions arise, the attorney representing the company will be called upon to answer the questions. The decision on whether the case will receive some funding is made within 24 to 48 hours of receiving the documents of the case. If the case is taken , the company will forward a contract to the attorney representing the case, here they will outline transactions , rates and how they will receive the money from the company. Sometimes litigation financing will be a post settlement advance , this means that a case has already been settled. Medicare solutions, distribution protocols or court order approval among other reasons may occasion the need for post settlement advances.