WARNING: Pre-settlement funding is not a loan
Did you know that most lawsuits are related to personal injury cases? Personal injury cases involve the plaintiff, an individual or group of individuals who are claiming to be harmed whether negligently or intentionally by another party, which is the defendant. It is noted that in these personal injury cases, the plaintiff wins most of the time requiring the defendant to pay. The legal proceedings for this sort of lawsuit take years and require astronomical fees. For these reasons, personal injury plaintiffs are usually advised by their lawyers to avail of pre-settlement funding while the legal proceedings are still ongoing.
Though personal injury plaintiffs usually win the case, there is one thing that could hinder them from filing it. Personal injury lawsuits can take a couple of years and along with the long process of litigation will be their bills piling up. While the trial takes place, the plaintiff will not be able to work and will not receive payments from his company. Pre-settlement funding, which is non-recourse, is the answer to this underlying financial dilemma of personal injury plaintiffs. This non-recourse funding is favorable to the plaintiffs. Non-recourse means that the plaintiff repays only if the lawsuit is successful.
This is how the funding works. The plaintiff looks for a finance company that offers such funding. Then, the finance company gets information from the lawyer taking care of the case to estimate how much will the settlement be and grant fund to the plaintiff. When the lawsuit comes out successful, the fund will be returned to the finance company plus a settlement percentage. This is why pre-settlement funding is not considered as a loan. Because of usury laws that tackle exorbitant interest rates, the contract only involves the plaintiff’s promise to pay a settlement percentage if the case wins.
Plaintiffs of personal injury cases do not have to worry about the astronomical costs involved. Through the long duration of the legal proceedings, the plaintiff has to sacrifice his employment to take care of the case. To make sure he can fund the litigation and his living as well, he can ask financial assistance from a finance company that offers pre-settlement funding. Strictly speaking, the amount received by the plaintiff is not a contract due to usury laws. The plaintiff signs a contract that promises to pay a portion of the settlement in the event that the case is won.
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