Rapid Legal Finance

When one considers the financial stress a person may be carrying when involved in a personal injury lawsuit, it is easy to understand how that person may have a need for a loan. Often plaintiffs have significant personal financial obligations following their injury. If severely injured, he may not be able to work, or may have significant medical bills associated with the injury.

One may ask “How come the plaintiff’s attorney doesn’t just lend them money?”

First, most attorneys taking on personal injury cases finance the cases themselves – they work on “contingency”, meaning they do not get paid until the case settles, and only if the case settles in their client’s favor. However the attorney fees and litigation costs are being financed, though, attorneys do not have a budget for loaning their clients money – this is a conflict of interest. Imagine if the case didn’t settle to their client’s advantage. This would pose an even greater financial risk for attorneys, prohibiting them to take on as many “contingency” cases.

In a lot of cases, a plaintiff will not want to wait until the end of the litigation process to get their money. For this reason, a growing number of lawsuit financing companies have emerged, usually offering “non-recourse lawsuit loans” to plaintiffs. A loan such as this is also referred to as a “cash advance” or similar terms, so as to avoid state usury laws (laws prohibiting lenders from charging an excessive interest rate.).

Obtaining a cash advance on a lawsuit is a popular solution nowadays for plaintiffs involved in personal injury lawsuits. Of course a plaintiff should consult his lawyer about his circumstance before taking out a pre-settlement lawsuit loan, or choosing a particular litigation finance company to provide a cash advance. Sometimes a case will settle before the plaintiff expects it to, and he may be able to avoid the advance and resulting interest fees altogether. In any case, the attorney’s cooperation is necessary, as he will be asked to provide documentation for the funding source to evaluate the case’s merit (as the basis for the cash advance), as well as agree to the terms of the advance.

This entry was posted on Monday, April 13th, 2009 at 9:20 am and is filed under Ethics of a Lawsuit Cash Advance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.