Funding for Lawsuits & The 4 Things You Must Understand!
Funding for Lawsuits has been around since the British Empire enacted tort laws allowing victims to sue for damages incurred at the negligence of another. More recently in the United States, advance funding for lawsuits has become a cottage industry which primarily helps plaintiffs with personal injury claims pay their bills while waiting for their settlements. I will try to explore the ins and outs of using lawsuit funding and help injury victims understand their options.Advance funding for lawsuits in the United States began in 1999 after states had repealed champerty & maintenance laws that had previously restricted funding for lawsuits. As with any new industry there were many companies that entered the market looking for an opportunity to profit from plaintiffs by advancing them funding on their lawsuits.
Many of these companies went out of business and in 2012 there are 8 major funding companies and hundreds of “brokers”. Seeking funding through a broker can cost plaintiffs a lot more in the end. Below is a list for plaintiffs seeking advance funding for lawsuits.
Beware and Avoid These Obvious Things
- Brokers: Many companies on the internet will pose as actual pre settlement funding companies but the actually broker your application out to different funding companies in hopes of receiving a commission. Commissions range from 12% to 18% and this fee will be added to the cost of your transaction!
- Fees: Many funding companies charge high fees and do not have a cap on their fees. Look for a company that provides funding for lawsuits and puts a “CAP” on their fees so you know the most you will have to repay when your case settles.
- Full Disclosure: Make sure there is a “Full Disclosure” box on the funding agreement before you sign and accept a case advance on your settlement. This box should clearly explain what you will owe back in 3,6,9 & 12 months.
- Established Companies: Make sure the company you choose is a reputable pre settlement finance company and that they have been in business for 10 years or more. A reputable funding company will listen to your needs, provide the financing you need and offer excellent service. Companies like www.glofin.com have issued more than 85,000 advances without complaints.Bottom line is to do your research. If the company issuing advance settlements on lawsuits has real owners and has been in business for 10 years then you have filtered out 99% of the bad apples.
Applying for Funding on you Personal Injury Lawsuit
- Research: Before applying for a cash advance on your settlement it is important to do some research to make sure you have chosen the correct company. The research should entail research on the internet, speaking with friends and calling some of the companies you had selected to discus fees and policies.
- Application: You can either apply online or over the telephone. Either method is fine but choose the one that you are most comfortable with. If you call then make sure to get the name of the person who takes your application and their extension.
- Facts: Provide all of the supporting facts of your legal claim to the funding company to increase your chances of getting approved. All details that you or your representing lawyer provide can be used to help you get approved for funding on your lawsuit. The facts you provide to the funding company will help with the amount you are approved for, not just if you are approved.
- Approval: Once you are approved for funding make sure to provide an email or fax number so you can get the Funding Agreement to executed. Most companies offer e-signatures via email. Your lawyer will also need to sign the agreement before you get funding so make sure he/she is aware of the transaction and takes the time to execute on your behalf.
- Funding: Most companies that provide advance funding for lawsuits will offer either direct deposit into your bank account or MoneyGram / Western Union. This way you can get same day cash at any Walmart or CVS without having to pay banking fees etc. Make sure to ask this question before going through the application process.
- Repayment: You will not be required to make any monthly payments during the course of your legal case, however, it is important that you check your balance with the funding company every 6 months or so. The funding company will have a “lien’ or “assignment” on the proceeds of your legal claim.Upon settlement, your personal injury lawyer will request a payoff letter from the legal funding company and make payment to them. Once repayment is made, you will have no further obligation to the funding company.
Funding for lawsuits can help plaintiffs hold out for a fair settlement and avoid being financially pressured to accept a low ball settlement offer from an insurance company. Make sure that you seek reputable company that provides direct funding and is NOT a broker. Also, be sure they have been in business at least 10 years.
Finally, make sure that they CAP their FEES so that you will know the maximum repayment amount that will be due. There is no question that advance funding for lawsuits can be an important support service which allows plaintiffs to maximize the potential value form their lawsuit. In fact, the fees charged by legal funding companies are usually offset by an increased settlement amount.