Legal Financing
Legal financing also commonly referred to as legal finance, is a financial tool which plaintiffs in pending lawsuits receive money from companies that invest in lawsuits or claims. Litigants or claimants can finance their legal costs or out-of-pocket expenses by entering into an agreement that serves as a lien. If a plaintiff borrows money against their lawsuit and wins their case, they will pay back the investor the principle of the loan, plus a rate determined on a payment schedule. If the litigant loses their suit, they owe nothing. If you are interested in legal financing for a pending lawsuit or one that has reached a settlement, contact LawLeaf today.
Legal finance companies will only invest their money in civil litigation cases. A company may lend money for personal injury lawsuits or a commercial litigation suits. Legal financing is only available to those plaintiffs that have legal representation.
Like any investment, there is an element of risk for the investor. In order to minimize the risk an underwriter will evaluate a claim. Based upon the underwriting process and further due diligence, a legal finance company will determine how much money they are willing to lend and at what rate. If a company believes the plaintiff's case is not fundable, they will reserve the right to deny an applicant.
When a person applies for legal financing the money may be used differently depending upon the case type. Legal finance falls into two categories: personal injury and commercial litigation.
Personal injury cases tend to be easier to fund and the process takes less time. When a person applies for legal financing against a personal injury case they will be approved based upon the merits of their case. However, the money can only be used for personal reasons. If you have retained your attorney on a contingency fee basis and the money is not used for legal costs (expert reports, attorney fees, court costs etc.) a company will consider the applicant. If you are applying for legal financing to help pay for these fees, the applicant will be denied.
Legal finance for a commercial lawsuit is different depending upon the investor and the size of the claim. There are some companies that will provide legal financing to help pay for expert reports, lawyer fees and court costs. These types of cases are generally high recovery cases involving complex litigation. A person may have to borrow up to a certain limit to be approved. There are other legal finance companies that will provide legal financing for commercial cases however like personal injury lawsuits, they can only borrow money for personal reasons.
If a person has recently settled a case or won a verdict, and they are interested in borrowing against the future proceeds, the rate tends to be more affordable. Because legal financing is non recourse, companies will determine a rate and payback based upon factors of time and risk.
Legal finance companies will only make money from their investments if the plaintiff wins their case. In order to reduce risks the underwriting process could take as little as a day to several weeks. A lender will evaluate your case based upon documentation, expert witness reports, medical records and conversations with your attorney. These documents may vary depending upon your case type. In order to verify the strength of a case, a legal finance lender may call on a third party to evaluate a case.
Legal finance for attorneys:
At LawLeaf, we provide legal finance services to attorneys and law firms throughout North America and abroad. Our requirements are that the case or case load has significant upside and value. Like a plaintiff, an attorney's case(s) will be evaluated by an underwriter; however the firm is typically a large institutional fund. While personal injury legal financing can be available to attorneys, LawLeaf specializes in providing legal finance options to firms that handle large complex commercial litigation cases. We have no maximum on how much money you can obtain, however minimum requests start at around a $1 million.
If you are a plaintiff or attorney searching for a legal finance company, contact LawLeaf today. LawLeaf is a leading online lawsuit funding company providing services throughout the United States.
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