Pre-Settlement Funding for Product Liability Cases: Pros and Cons

Pre-Settlement Funding for Product Liability Cases: Pros and Cons

When dealing with a product liability lawsuit, plaintiffs may be tempted to apply for pre-settlement funding. Before doing so, it is important to understand what pre-settlement funding is, what the pros and cons are, and whether this type of funding is the right financial solution for your product liability case.

What Is Pre-Settlement Funding?

Pre-settlement funding is a type of financing that allows plaintiffs to receive a lump-sum cash advance against a future potential damage award or settlement. Plaintiffs typically receive pre-settlement funding for a variety of personal injury cases, including product liability suits. These cash advances can provide litigation support and help plaintiffs cover their everyday expenses. However, it’s important to note that pre-settlement funding is not a loan but rather an advance on any future potential settlement or judgment. If the plaintiff loses the case, they are not responsible for repaying the money to the funder.

Pros of Pre-Settlement Funding

Pre-settlement funding for product liability cases offers plaintiffs the financial resources needed for the legal battle. It can pay for medical bills, therapy sessions, and even rent, and it can provide an easier path to managing debt. In addition, with pre-settlement funding, plaintiffs don’t need to worry as much about attorneys’ fees, as the funder will typically pay these bills. Furthermore, pre-settlement funding carries minimal risk, as the plaintiff only repays the funder if they receive a settlement or judgment in their favor. Lastly, pre-settlement funding can give a plaintiff the extra time they need to file a legal claim, as the funding allows them to focus on the legal complexities of their case.

Cons of Pre-Settlement Funding

It’s important to understand that pre-settlement funding for product liability cases isn’t without drawbacks. First and foremost, there can be expensive fees. Funders will sometimes charge as much as 25-40% of the settlement, which can take away from a potential award. In addition, pre-settlement funding can limit a plaintiff’s legal options, as the funder may have legal preferences that the plaintiff must adhere to. Moreover, if the plaintiff receives a settlement or judgment, it may not be as large as it could have been. This can happen if the funder charges a percentage of the settlement or if the plaintiff’s lawyer must hold back funds to pay off the funded party. Finally, pre-settlement funding is often only available to those with a solid case with a favorable outcome.

Conclusion

When dealing with a product liability lawsuit, pre-settlement funding can provide a financial lifeline. Pre-settlement funding can help cover medical bills and other expenses, while also helping to pay attorneys’ bills and giving the plaintiff extra time to prepare their case. However, pre-settlement funding carries risks, as funders may charge expensive fees and the award may not be as large as anticipated. Therefore, it’s important for plaintiffs to weigh the pros and cons of pre-settlement funding before entering into an agreement with a funder.