Suing Can Be Expensive: Lawsuit Funding Can Help
Bad things happen in life, such as getting into a car accident or getting fired from a job for no good reason. The aggrieved party has the right under the law to sue for any damages they feel has ruined any part of their life, including reputation, finances, family relationships, or mental anguish.
These are just a few in a long list of things people can and do sue for to get some kind of retribution. While it is anyone’s right under the law to sue, it is not free, and depending on whom they are suing, the outcome can be really fast or painfully slow. If the defense is a well-funded corporation, the process may take quite a long time.
To sue someone, it should be said that the aggrieved person should feel so violated that suing was their only option. Most lawyers taking on civil cases work on a contingency basis, but once the process starts, the bills start piling up. First, because the lawyer is taking the case on a contingency basis, he is expecting a big payoff at the end assuming the case settles. Next, doing the actual nuts and bolts of the case, such as phone calls, research, faxes, and hiring expert witnesses cost money and time.
Then there are other expenses like gas and court costs that can add up pretty quickly. If the case drags on for longer than the estimated time schedule-which frequently happens-the costs might start to become unmanageable.
These are just the lawyer’s costs. With many personal injury cases, the plaintiff cannot work. Bills pile up quickly. Unfortunately, bills cannot be paid with promissory notes of future money. The plaintiff may try going to a bank or credit union for a loan, but that process usually takes a long time.
Both plaintiffs and attorneys have other options to help them pursue their cases. There are lawsuit funding companies that provide pre-settlement financing. This type of funding is not a loan that has to be paid back, but a non-recourse transaction where payment is only due if the case settles.
This is a common choice for plaintiffs. Because the factoring company is taking a significant risk, the rates are generally quite high. Monthly compounding of a high interest rate over a long period of time makes this an expensive option.
In some instances, such as personal injury and class action cases, it can take a long time to get paid even after the case has settled. This is where attorney fee financing becomes an option. A lawsuit funding company purchases your legal receivable at a discount and advances you money. Because the case is already settled, the interest rates are usually significantly lower than pre-settlement advances.