5 Things Your Lawyer Should Tell You About Lawsuit Funding
If you’re in the midst of a personal injury lawsuit and you’re running low on cash, lawsuit funding may be the right option for you. You could have the money you need to pay for medical bills, accident-related expenses, and more in as little as one business day.
While we can answer any questions you may have, you’ll be working closely with your lawyer while pursuing funding. They’ll be able to tell you what your funding amount may be, your chances of approval, how your privacy will be protected, what the fees will look like, and what state laws could impact your funding.
- Lawsuit funding is different than traditional funding.
When you think about traditional funding sources, you may worry about your financial history or employment status or collateral. Your lawyer, however, will explain to you that lawsuit funding is different.
When you apply, the funding company only takes into consideration your personal injury claim and how much money you’re requesting. Pre-settlement funding companies understand that plaintiffs need money fast. That’s why the application process is simplified.
The repayment process is also easier. With Preferred Capital Funding, for example, you only pay us back in one lump sum after you’ve won your case.
- A strong case improves your cases of being approved.
The strength of your case is the most important factor when your application is considered by the funding company’s legal underwriters. This is because the funding company absorbs the risk. Lawsuit funding is nonrecourse, which means if the plaintiff loses their case, they do not pay the funding company back. When your lawyer speaks with the specialists from the funding company, they’ll need to prove your case is strong.
Legal underwriters also look at the following to approve applications:
- The value of the case based on variables like the outcomes of similar lawsuits in the past
- The projected timeframe for the lawsuit to resolve
- How much the funding company can safely approve
- The discount rate that should be applied to the funding based on the risk associated with the case
- Your case-related information will be kept confidential.
It’s likely that your lawyer will need to forward that funding company sensitive documents, like medical and legal paperwork, on your behalf. There are a number of measures both parties will take to ensure your privacy is protected.
First, a HIPPA consent form will need to be filed and signed by both you and the funding company. This protects your medical documentation. Your lawyer will also make sure you applied for funding from a company before providing them with any paperwork regarding your matters. This will ensure only the proper funding company receives your information.
Finally, your lawyer will verify if you’re going to be working with a broker or a direct funder. If you’re working with the former, your documents could be passed around to multiple people. When you work with a direct funder, it’s likely they’ll be the only ones with access to your information.
- Every funding company has a different fee structure.
Having your lawyer explain the terms and fees of the agreement is crucial so you can make the best decision for you and your family. First off, you’ll want to know if you have compounded or simple interest. Compounded interests can end up costing you more than simple interest rates, depending on the percentage. Your lawyer will also let you know about any associated fees. While there is no cost to submit an application, there may be administration or processing fees that are calculated in the payoff amount.
- Regulatory conditions are always changing.
State laws can affect the regulatory environment of lawsuit funding. Your lawyer will look into the terms of the funding agreement to verify if they meet the current regulatory guidelines. Not all states allow legal funding. When a state does, there are often regulations attached than can impact how much someone can request or the timeframes in which it can be requested. Understanding how the regulations affect your funding is crucial before you sign any agreements.
Once you and your lawyer have discussed your legal funding options and you feel like you have a firm grasp on your situation, the next step would be to submit an application. We make the process fast and simple. If you’re ready to receive the money you need to recover while your lawsuit is ongoing, submit your application today.
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