Most people think of banks or credit unions when it comes to financing operations for their business and plaintiffs’ lawyers are no different. In the best case scenario, banks will evaluate an application and after doing their due diligence they will issue a decision to lend or not to lend. However, things aren’t that simple because sometimes those institutions aren’t able to evaluate certain kinds of businesses. Banks and credit unions are different and each one has their own guidelines they follow, but for a business like running a plaintiffs’ law firm, time spent searching for bank can mean winning or losing a case. That outcome can have huge effects on a lot of people depending on the case and can be a fatal blow to the law firm if it results in a loss. That is why an alternative industry has developed specifically to help those in the plaintiffs’ law practice. That industry is called litigation funding. Litigation Funding is also known as legal finance or legal funding but it pertains to specialized companies that focus on providing funding to plaintiffs’ lawyers and in some cases their clients the actually plaintiffs in the case. In this blog post, RapidFunds breaks down the different kinds of legal funding because it can get complicated. We also list some resources people can read and watch to learn more about the litigation funding industry.
Case Cost Financing: When a plaintiffs’ attorney decides to litigate a case on behalf of their client, there are financial realities that are accepted based on this decision. Depositions,documents travel, and other miscellaneous costs are part of doing business. In some cases like huge class action lawsuits, those financial burdens maybe too much to bear especially if the firm is litigating more than one case at a time. Case Cost Financing was created to help plaintiffs’ attorneys and law firms receive funding for their cases before and while the case is ongoing to help them deal with the financial difficulties some cases can bring.
Post-Settlement Funding: When a lawsuit reaches a settlement where both parties agree to a resolution, sometimes payment can take a long time depending on how difficult the case was. Payment can also be delayed because of the number of plaintiffs or entities involved in the case. There are a lot of reasons why it can be held up. Post-Settlement Funding was started to help plaintiffs’ attorneys and their clients access funding on their settled case award or fee so they aren’t waiting to receive payment from the defendants on the case.
Pre-Settlement Funding: Most people associate legal funding with pre-settlement funding because of the growth in the industry and the somewhat commercialization of the industry. In the early 1990s, when the industry first started it was only known in legal circles and as it has become more mainstream, people have grown accustomed to what it is. Companies offer pre-settlement funding to plaintiffs and sometimes their representatives in typical cases like personal injury, auto accidents and medical malpractice claims. They do this so the plaintiffs can get some monetary relief to pay their bills and maintain a standard of living while their case proceeds in court. Court cases can take a long time due to the motions, depositions, etc so an injured person could be waiting months or even years while their case is heard. Some of the companies have been in the news for charging huge fees to their clients and there has been some murmurs and moves from legislators about regulation.
Verdict Funding: A lot of civil cases end with a verdict by the jury and usually it is a huge number associated with the resolution. However, a lot of those cases are appealed and usually the first number stated gets reduced. In some cases, that number is upheld. Funding companies that offer verdict funding provide financing to the plaintiffs’ and plaintiffs attorneys based on their verdict in the jury cases. These companies use a formula where they give a small portion of the money due to both parties but retain some while they wait for the appeals to be exhausted. These companies also take into consideration the defendant in the case to see if they are able to pay the amount once the appeals are finished.
Structured Settlement Funding: In cases where the plaintiff is incapacitated or elderly or decides to not receive their award in a lump sum, there are companies that will provide funding in increments based on that award. There are tax benefits and security for the plaintiffs that decide on this way. A lot of these companies provide funding to lottery winners who decide to receive funding in portions and structured settlement funding companies will be able to give them much more upfront based on their award.
Appeal Funding: Most cases that end with jury verdicts end up getting appealed. Sometimes the jury award is so large, the defendant has to appeal and in many cases the award is reduced. Companies that offer appeal funding provide financing to a plaintiffs’ attorney or plaintiff using a formula where they are able to give a portion while the appeal works its way through the courts. Sometimes the appeals process can last eighteen months but in most cases they are shorter.
Judgment Funding: Jury verdicts and judgments from the court are very different. A jury verdict is a decision reached by a group of people tied to a specific case. A judgment from the court is the official final decision on the case and they can both be appealed. Some companies offer to buy the judgments from plaintiffs offering them money upfront and they take the risk of waiting through the appeals process. There are too many companies that offer this option, but it remains a path for funding for plaintiffs that have judgments and want to cash in quickly.
Arbitration Funding: Companies and individuals sometimes choose arbitration over a trial because the costs associated and the risks are much less. The decisions by the arbitrator can be binding meaning once the decision is made, there can’t be an appeal so that can be a huge risk. Over the years, there has been a growing trend in business to force individuals into arbitration if there is an issue. Companies that offer arbitration funding to plaintiffs and their attorneys looking for financing on their respective award and fee in the case. Cases where international entities are litigating against each other, arbitration can be the best venue. The practice is growing in the United States, but it is much more mature in Europe.
About RapidFunds
RapidFunds provides post-settlement funding in settled cases and case cost funding for pending and ongoing cases to plaintiffs’ attorneys only. Interested plaintiffs’ attorneys can fill out an application on our website or complete the application here. For more information about post-settlement funding, case cost finance, and the funding process call 888-927-9500 or email info@rapidfunds.com.