Everything to Know about Litigation Financing.
When you are in a lawsuit, you look forward to the results turning in your favor. Litigation funding or financing is a practice where a third party not involved in the lawsuit provides funds to the plaintiff involved in litigation. Gaining lawsuit financing depends only on the merit of the case that you are involved in , this is because the person financing the lawsuit needs to be guaranteed of getting back his money with the settlement.
Its important for the company to look in to the lawsuit itself when financing the case because the money is not a loan. It is simply an assignment of the portion of the client or attorney’s interest in anticipated recovery of the client. This is to clearly mean that if a case is lost the money that the lawsuit financing had offered gets lost as well. When it comes to a case being financed, some may question on the ethical nature of a lawyer referring a client to a lawsuit financing party.
Yes it is ethical if a lawyer refers a client to a lawsuit financing company provided they have no interest in the financing company. To polish off on the ethical requirements, the lawyer should not in any way profit from the transaction that is going to happen. There will be a conflict of interest if the lawsuit company is involved in the lawsuit so the company that has been approached by the client should not be involved in any way. When the lawyer refers the client to the financing company , there are benefits for all the parties involved , some too obvious. The client gets to rest easy if they have secured financing especially if they had no plans to raise the money otherwise. Its unfortunate that sometimes the client is not in a position to finance the settlement case and in such situations, the input of litigation financing will highly be appreciated. To have the pre settlement advance is a process but not complicated at all. One needs to fill an application which will help the company to evaluate the lawsuit.
For the attorneys that are representing the case , any questions that the company might have, it will direct to them for clarifications and answers. The decision on whether the company will support the case is made within one to two days of receiving the documents of the case. Should the case be accepted , the attorney will forward a contract to the lawyer representing the case outlining terms and conditions and how they will receive money from the company. Sometimes litigation financing will be a post settlement advance , this means that a case has already been settled. Medicare solutions, distribution protocols or court order approval among other reasons may occasion the need for post settlement advances.