The Benefits of Post-Settlement Lawsuit Funding for Attorneys

date: 03/08/2012

If you are a plaintiff attorney, you understand the importance of proper cash flow management. You face unique challenges working on a contingency fee basis. Irregular cash flow is one such issue. Sometimes, there are long periods of time between receiving your hard earned fees. It can take months, even years, before you actually receive your fee-even after the case has settled. This can make it extremely difficult to grow and expand your law firm.

Traditional financial products are often not adequate to support your firm’s monetary needs. For example, banks generally do not consider your caseload as collateral. As a plaintiff attorney, this can be extremely frustrating, since your caseload is your most valuable asset. Fortunately, there are specialty finance companies that can factor your legal receivables and expedite the payment process.

These legal funding companies provide a service called post-settlement funding, also known as fee acceleration. Instead of waiting the months it can take to receive fees on your settled cases, they accelerate this process by purchasing your legal fees at a discount, thus converting your settled cases into working capital.

Post-settlement legal funding companies will generally advance fees on any type of case, including personal injury, employment discrimination, negligence, securities class actions, medical malpractice, product liability, wrongful death, court appointed fees, infant injuries, and wage and hour disputes. Most other types of legal funding only deal with personal injury lawsuits.

It should be noted that post-settlement lawsuit funding is not a loan. It is a non-recourse advance that involves you, the attorney, selling your legal fee to a factoring company.

The benefits of post-settlement lawsuit funding are numerous. Unlike a loan, there are no monthly interest payments or points. Plus there are no restrictions as to how you can spend the money, unlike most lines of credit. You can use these resources to expand your law firm, including launching a new advertising campaign, hiring more employees, and retaining expert witnesses. In addition, because this is a non-recourse transaction, you are not responsible for payment if the defendant for some reason defaults.

Post-settlement legal funding can be an effective cash flow management solution for the plaintiff attorney working on a contingency fee basis. As with any business decision, always do your research. Make sure you are dealing with a reputable company and always read and understand the terms of the deal before proceeding.


About the Author:

David Smethie is the Deal Origination Manager at RD Legal Funding, LLC, a New Jersey based lawsuit funding company that focuses on post settlement financing. RD Legal's proprietary fee acceleration program converts legal fees associated with settled cases into immediate cash for both attorneys and plaintiffs. The company has been a leader in the legal funding space since 1997.

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