Litigation Financing: What is it and How Does it Work?

Have you heard of litigation financing? Litigation can be costly and can cost the plaintiff financial trouble if the lawsuit is long and drawn out. There are many times when people do not have sufficient funds in order to finish the litigation process as medical bills, personal expenses and mortgages are mandatory expenses that need to be paid on a monthly basis. If you have concluded that you do not have the funds required in order to finish a lawsuit hearing, then there are options in order to obtain cash to pay for expenses during the litigation. Some people can try and obtain a personal loan through a bank, but this just means that you are going to put yourself into more debt, and will deepen your financial turmoil. Instead of doing this to yourself, you should try to seek a litigation finance company. Financing litigation is a valuable resource for obtaining money while battling through court hearings.

In order to obtain financing from a commercial litigation financing company, you will have to consult with your lawyer and tell them that you need some assistance in order to finish out the court hearings. The lawyer will probably refer you to a litigation financing company and the company will review the case with your lawyer. If the company has predicted that you will win the case, they will use a structured settlement calculator to determine an estimated amount of what you will receive for your settlement. If the outcome of your case looks favorable, then the finance company will go ahead and pay you. The financing company will give you the money and will pay you on a periodic basis. These payments are not considered loans because each contract is non-recourse, which means that the litigation financing company will not be able to claim any assets against you if you do not win your case. These companies are taking a huge amount of risk for lending money to you and are compensated through fees. Also, you are obligated to pay the financing company back (with interest) on any earnings won from the litigation. The lawyer will receive the settlement check and will advance the money entitled to the financing company.

Source(s)

Litigation Financing Editor. "Litigation Financing | What Attorneys Need to Know About Lawsuit Funding." Litigation Financing