How Pre-Settlement Funding Can Help You Pay for Your Legal Fees
Pre-settlement funding is a relatively new concept in the legal industry, but it is becoming increasingly popular among plaintiffs seeking financial assistance. Pre-settlement funding, also known as lawsuit loans, is a type of loan that allows plaintiffs to access a cash advance before their lawsuit is settled. Pre-settlement funding is a great way for plaintiffs to cover legal fees and other expenses incurred throughout the course of their lawsuit.
When filing a lawsuit, plaintiffs must often pay filing fees, court costs, and other upfront costs associated with the lawsuit. Plaintiffs may also need to pay for expert witnesses, travel expenses, and many other costs associated with their case. Many times, plaintiffs have already drained their savings and resources, leaving them unable to cover these expenses. As a result, plaintiffs may be unable to pursue their case or could even choose to back out of their lawsuit altogether. Fortunately, pre-settlement funding can help the plaintiffs fill this gap in financing and remain viable throughout the legal process.
Pre-settlement funding is offered by companies known as litigation finance companies. These companies specialize in financing lawsuits and provide the plaintiffs with a cash advance. The cash advance is usually three to five times the plaintiff’s estimated settlement award. The companies use factors such as the type of case, estimated settlement amount, and the plaintiff’s creditworthiness to determine the amount of pre-settlement funding. The cash advance can be used by the plaintiff to pay for legal fees and living expenses.
When taking out pre-settlement funding, plaintiffs should be aware of the risks involved. Pre-settlement funding is a type of loan and is typically offered with very high interest rates. The rates may vary depending on the lender and the amount of the loan. Additionally, the companies that offer pre-settlement funding may ask for a “post-settlement funding fee” when the lawsuit is settled or a certain amount of time has passed. This fee is often between five to twenty percent of the settlement amount. Although this fee may seem high, it is a reasonable trade-off for the ability to access funds before the case is settled.
Despite the risks associated with pre-settlement funding, it is a valuable resource for plaintiffs who may not have the funds to pay for legal costs and other expenses associated with their lawsuit. Pre-settlement funding can provide the financial assistance plaintiffs need and allow them to pursue their case without worrying about how to pay for legal expenses. It gives plaintiffs an opportunity to stay in the case, pursue their lawsuit and increase the chances of a successful outcome.
