The Legal Funding

The Process Of Legal Funding


Legal financing which is also referred to as pre-settlement funding is common in most modern law firms. It is mainly a financial tool that is used by a plaintiff when they have an ongoing or pending lawsuit. It is, therefore, a non-recourse loan where a plaintiff who has lodged a lawsuit mainly against personal injury or commercial litigation claims borrows. The lawsuit is used as the collateral by the company which is lending the money to the plaintiff. If the trial is successful, the plaintiff is bound to pay back the principle amount as well as the interest agreed upon with the company. However, if the claimant loses the case, they are no bound to pay back the advance to the enterprise.


Typical cases which plaintiffs require legal funding include motor vehicle accidents, medical malpractices or wrongful deaths. Employees suing their companies due to physical injuries caused either by negligence by the firm may also be considered should they present a big lawsuit. It helps in even covering medical expenses during the process. However presettlement lawsuit funding should only be an option for persons in dire need of it as they are costly.


Pre settlement legal funding serves the purpose of helping plaintiffs through lawsuits. Mostly it works for workers who are after compensation from their employers and may not have the necessary funds to use throughout the legal process.  They, therefore, have enough funds to run their lawsuit and will not be forced to settle out their cases which may result in little compensation or no compensation at all. With legal funding, they can borrow against their lawsuit.


Although legal funding is used to help plaintiffs through their cases by funding them, it is important to note that companies mostly won't approve the funding if the finances are channeled towards legal fees. Before approving the funds, there is a process just like it is the case with other forms of loans. The company, therefore, needs to be convinced about the strength of the particular case and if the case looks formidable, they can approve the funding. They, therefore, keep in constant communication with the lawyers handling the case. Lawyers keep updating the company and produce the documents on the case as it progresses. It helps the company with assessing the strength of the lawsuit, and they can fund the case if they find it reliable enough to be compensated and also the company gets an insight into the amount the plaintiff is likely to get from the case as the settlement for the case. Know more about loans at

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