A young man is injured when a wrong-way driver sideswipes his car. Unable to work because of his injuries, he quickly depletes his cash while waiting for his case to settle. Now what? Injured plaintiffs have a number of options to obtain funds to pay for living expenses while their case runs its course.
— Use savings to pay for expenses
— Charge expenses on credit cards
— Apply for lines of credit or bank loans
— Borrow against a 401k or other retirement plan
— Borrow from friends or family
If the case is won, the plaintiff can pay off loans or replenish savings accounts. If the case is lost, the plaintiff must still pay off the loans. An alternative is pre-settlement funding (also called legal funding and plaintiff funding). This kind of funding is not a loan. It is a non-recourse advance of funds – meaning that if a plaintiff loses in court, funds received by the plaintiff from the funding company don’t have to be repaid.
Pre-settlement funding companies work with plaintiff attorneys to determine the likelihood of a favorable plaintiff settlement before offering an advance.
For plaintiffs, pre-settlement funding eliminates the concern that they will be faced with an even more dire financial situation should they lose their case. Because funding companies take all the case risk, their services are not as inexpensive as say, a mortgage. Funding companies typically charge higher rates than a bank loan since funding companies don’t have real estate collateral and repayment is not being guaranteed by the recipient.
It’s up to injured plaintiffs to determine the option that is best for them. They should work with companies such as Rockpoint Legal Funding that disclose all funding costs upfront before they decide whether pre-settlement funding is the right option.
For more information, please give us a call at call 855-582-9200 or email Ramtin Ghaneeian, Rockpoint Legal Funding president, at email@example.com.