Can I receive pre-settlement funding for a class action lawsuit?
Class action lawsuits can provide a viable path for those who have experienced harm or damages as a result of another party’s illegal or negligent behavior. Typically, class action lawsuit plaintiffs do not need to pay any money upfront to kickstart the legal process. In fact, qualifying class action lawsuits are often filed on a contingency fee basis. Contingency fees are set up so that the class action plaintiff’s attorney will only be compensated if their lawsuit is successful.
Despite this arrangement, there may be times when a class action plaintiff needs financial assistance during the course of their lawsuit. This is especially true if their legal expenses are higher than anticipated or if their lawsuit takes longer than expected to reach a resolution. Fortunately, under certain circumstances, a class action plaintiff can receive pre-settlement funding.
WHAT IS PRE-SETTLEMENT FUNDING?
Pre-settlement funding, also known as pre-settlement funding or a litigation loan, is a non-recourse, cash advance against a pending lawsuit. The idea behind pre-settlement funding is that a third-party investor will provide a class action plaintiff with a lump sum of money in exchange for a cut of any settlement or judgement that is ultimately awarded. Pre-settlement funding allows class action plaintiffs to receive a financial boost while they await the outcome of their lawsuit.
Pre-settlement funding is available for all types of lawsuits, including class action lawsuits.
WHO CAN RECEIVE PRE-SETTLEMENT FUNDING?
There is no definitive list of who can and cannot receive pre-settlement funding. Generally, the decision comes down to a case-by-case basis. Here are some qualifications that may help you determine if your particular class action lawsuit is eligible for pre-settlement funding:
1. Your lawsuit must be valid and have a chance of success.
2. Your class action lawsuit must be filed by a law firm.
3. The amount of funding requested must be reasonable and in line with the potential outcome of your lawsuit.
4. The requested funding must be for reasonable costs associated with the lawsuit (e.g., legal fees, expert witness fees, etc.).
5. You must be able to demonstrate ability to repay the pre-settlement loan.
WHAT ARE THE BENEFITS OF PRE-SETTLEMENT FUNDING?
For class action plaintiffs, there are several advantages to receiving pre-settlement funding. The most obvious benefit is that it can provide much-needed financial relief while you await the outcome of the lawsuit. Pre-settlement funding can also help ensure that your legal team is able to adequately prepare for your lawsuit without additional financial stress.
Pre-settlement funding is also beneficial because it does not require repayment unless your lawsuit is successful. This means that you will not be saddled with debt for a lawsuit that may not be successful. Additionally, pre-settlement funding eliminates the need for you to take out costly loans from traditional lenders.
WHAT SHOULD I CONSIDER BEFORE APPLYING?
Although pre-settlement funding can be beneficial, it is not right for everyone. Before you apply for pre-settlement funding, it is important to be mindful of the potential risks involved.
First, it is important to note that pre-settlement funding is considered to be a relatively high-risk investment. This means that pre-settlement funders charge a higher rate of interest than traditional lenders. Additionally, the repayment process can be difficult and time-consuming, so it is important to be sure you are comfortable with the terms of the loan before signing.
It is also important to consider the potential financial implications of a pre-settlement loan. Typically, pre-settlement funders will take a “contingent fee” out of the settlement amount on your behalf. However, the amount of the fee will vary from lender to lender. Additionally, you must be aware that pre-settlement funding may reduce the amount of the settlement or judgment that you are ultimately entitled to receive.
Finally, before you make a decision about pre-settlement funding, it is imperative that you discuss your case with a qualified lawyer. A qualified attorney may be able to provide additional insight about pre-settlement funding and can help you decide if it is right for you.
CONCLUSION
Class action lawsuits can be time-consuming and expensive. If you are considering a class action lawsuit, pre-settlement funding may be an attractive option for obtaining much-needed financial assistance. However, it is imperative that you consider the associated risks before entering into an agreement with a pre-settlement funder. Additionally, it is wise to speak with a qualified attorney before making a decision about pre-settlement funding.
