LAWSUIT FUNDING 

The Lawsuit Funding Controversy 

There is a growing controversy among lawyers, plaintiffs and funding companies regarding the viability and necessity of lawsuit funding. The lawsuit funding industry immerged in 1998 when several companies began issuing cash advances to financially strapped plaintiffs. Since then the lawsuit funding industry has grown at a steady pace due to increased awareness of the service and substantial untapped demand for the service. Lawsuit Funding companies provide cash advances to personal injury and workers compensation victims that are in need of immediate cash for living expenses or medical bills. These funding companies do not do credit checks, income verifications nor do they require their customers to make monthly payments while to principle invested is outstanding. In addition, the customer is not personally guaranteeing repayment but rather assigning a portion of the potential recovery to the funding company. These companies claim they are engaged in making high risk investments that are only repaid if the legal claim is successful. Lawsuit Funding companies are quick to point out that increasing competition will lower fees and ultimately provide the consumer with a desperately needed service.

So What do the Critics of Lawsuit Funding Say 

The critics of Lawsuit Funding insist that these companies are taking advantage of the consumer by charging high fees when the customer has few other options. They proclaim that the personal injury victims are so desperate for funding that they are often willing to pay outrageous fees and don't consider the consequences. Some detractors to this type of financing even go as far as to claim that lawsuit funding companies are not taking any risk of repayment and that they are actually making loans. Why is this allegation so important to note? If lawsuit funding is actually a loan then usury laws apply to this type of funding. There has been no case law or legislative laws passed to support this claim but it does show how heated this debate has come. Opponents to Lawsuit Funding claim to be pro consumer but many of them are not actually lawyers and they don't fully understand the risks involved with pending litigation. Many trial lawyers are quick to point out that a jury can come back with almost any verdict or judgment and that the outcome of all cases is uncertain until the check has been received.

What do the Lawyers Think about Lawsuit Funding

The American Trial Lawyers Association (http://www.atla.org/) has not actually taken a stand or chosen a side in the healthy debate over Lawsuit Funding. This may seem ironic to some because many of the companies involved in lawsuit finance have donated to ATLA and lawsuit funding can increase the value of many cases. Surgical Funding which is lawsuit funding specified for a surgical procedure can increase the value of he legal claim and ultimately increase the lawyers, fee. It would make sense for them sot support the lawsuit funding community, however, they have not taken this on. It is clear that many trial lawyers that handle personal injury and worker compensation claims refer their clients in financial despair to these funding companies. Obviously they are inclined to find the companies with the best service and rates for their clients. In addition to lawyers that support lawsuit funding, there are lawyers that are adamantly against it. Typically, these lawyers have had a bad experience with one funding company and decide that the whole industry is bad. They usually remain this way until one of their clients is in dire need of medical care and since they are ethically barred from giving clients money, they finally realize the needs for lawsuit funding.

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Links

http://www.atla.org/

http://www.martindale.com