Litigation Funding in the News: Key Facts Law Firms Should Know

by | Jun 12, 2018 | Blog Posts

Litigation funding has been the topic of several articles lately but instead of providing clarity, those articles have created confusion. All of those articles involve pre-settlement funders. These are companies that invest in a plaintiff’s case before the case has been resolved. They provide funds to a client or their law firm while the lawsuit is ongoing. Although the articles tend to lump all litigation funders together, post-settlement funders are very different than pre-settlement funders and there is no controversy surrounding post-settlement funders.

Some of the criticism of pre-settlement funders involve claims that they can charge interest rates that exceed state usury laws while taking control of the case from the actual parties. This argument has led to proposed legislation as well as several court orders requiring disclosure of such arrangements. Other pre-settlements funders have been criticized as possibly not vetting the legitimacy of the lawsuits they were funding.

Those concerns do not apply to post-settlement funders who provide cash to attorneys only. While post-settlement funding for plaintiffs may involve some of the issues mentioned earlier, none of those concerns apply to attorneys. As a preliminary matter, attorney post-settlement funders provide cash to attorneys on settled cases. Because the case has already been settled, the funder has no involvement in the matter itself. The funding itself is an assignment of a portion of the attorney’s share of a settlement; the client’s funds are not impacted at all. The funding provides relief for law firms that need to fund the costs of the next case while they wait for settlement checks. In order to provide post-settlement funding, the funder, among other things, needs to confirm that the case is settled and review a release or settlement agreement outlining the settlement amount and the attorney’s fee.

Fees and interest rates can be an issue with any company that provides money. That’s why it is crucial to deal with a reputable company that is completely transparent about any costs and charges customary industry rates.

If you are considering post-settlement funding, it is important to pick the right company. RapidFunds is a leader in the attorney post-settlement industry. Learn more about our difference or contact Sherry Foley, Esq. at sfoley@rapidfunds.com for a consultation.