03 Apr Seven Duties of a Legal Funding Company
There are many companies offering to provide post-settlement funding to law firms, but they aren’t created equally. Lawyers need to do their due diligence and make sure they are working with a reputable company. In addition to asking specific questions about the company’s experience and terms, firms should look for a funder who clearly demonstrates that it is able to meet these obligations as a funder.
- Confidentiality. There are many companies who notify the defendant that the fee has been assigned – and this is deadly to a plaintiff’s attorney. Funders should never do that. They should keep all transactions confidential unless the contract is breached. Some funders also name drop. No one should know you did a deal unless you want them to know.
- Competitive pricing. When firms need immediate cash, they can fall prey to companies looking to take advantage of them. A reputable funder’s rates do not vary depending on your specific situation. Everyone is created equally when it comes to rates. If a funder tells you that they cannot tell you exactly how much you will be paying for funds that you receive from them, head for the hills. And always ask about other fees you will be charged. To make the rate seem more palatable, some funders offer a low rate but once fees and costs are tacked on, you are paying more than you bargained for.
- Honesty. Unfortunately, all funders can get a bad rap from the few who are dishonest, misleading or fraudulent. Make sure your funder has a reputation for honest business practices and has staying power. Do not do business with a firm that is not established.
- Efficiency. In most cases, an experienced funding company should be able to process your application and get funds to you very quickly – sometimes the same day you apply. If it takes a long time, it may indicate that they are not experienced or don’t have immediate access to financing to pay you.
- Courtesy. Firms have a right to expect to be treated in a professional manner. A reputable funder should be ready, willing and able to answer questions and help walk lawyers through the funding process.
- Clear and concise contract terms. If a contract is not clear, it is a good indication that the company is trying to hide something.
- User-friendly documentation. This goes along with clear and concise terms. Applications, contracts and other paperwork should be easy to understand so there are no misunderstandings about the agreement.
If you are considering using a funding company, vet companies carefully. Ideally, talk to a few before you need them, so you have time to ask questions and check out their reputation. For more tips on finding a good funding company, read our related post – How to Pick a Legal Funding Company.
To learn more about how RapidFunds® works, contact Sherry Foley, Esq. at email@example.com for a consultation.