Various Forms of Litigation Financing
Litigation finance is a cash advance based upon the merits of a lawsuit that provides a plaintiff with sufficient funding for concluding the case when they will receive their share of the settlement or verdict. The main role of litigation financing companies is to fund the plaintiffs in the case instead of giving them a loan. This finance is not based on a plaintiff’s previous credit or bankruptcy status.
The interest rates charged by different litigation companies for the financial assistance are different. It is true to say that these litigation finance companies assume a lot of risk due to their investment in the lawsuit as opposed to investing in the plaintiff. There are some lawsuits that are not resolved successfully in spite of how strong they are. Due to the risks involved, these litigation finance companies charge high-interest rates on the cases that are successful so that they can make up for the cases that have been unsuccessful. It is possible to find funding companies that consider multipliers to be better than the interest rates.
These litigation finance companies will provide you with the resources to fight a case in the form of a cash advance. This assistance is offered to any person who lacks the means to fight a case. Generally, lawyers are not allowed to provide means to the clients. However, the advocates are not prevented from telling the plaintiffs the various litigation financing options they can check out. Plaintiffs have several funding options they can seek financial assistance from.
The petitioners can check out the plaintiffs funding. This means that the plaintiff does not have to repay the loan if the case is lost. When the plaintiff is given this loan, they are expected to pay high rates if they win the case. The funding company only takes away a certain percentage of the amount paid after the case has been resolved.
Another financial option is the post-settlement financing. This form of financing is easily available to the people who are not sure when they will get the compensation.. It is however short-term cash advance and on a recourse basis.
Most of the litigation financing companies buy structured settlement payments from injury victims. Attorney litigation financing involves loans to attorneys. You can either pay or not pay after the case has been resolved successfully.
Appellate financing is also offered by the funding companies. It is often offered on a recourse basis to plaintiffs.
There are very many plaintiffs that rush to litigation finance as the answer to their current cash flow problems without completely understanding the facts behind litigation funding. It is good to research on the company before you get any funding from them.