What is pre-settlement funding?
Pre-settlement legal funding is an arrangement used to provide finances to a plaintiff pursuing a personal injury case. While it’s available to other types of participants in legal cases, it’s usually personal injury claimants who avail of it. Although it may sound like a traditional loan, pre-settlement funding is based on the potential for your case to succeed rather than your income and employment status. It’s still a new method of financing a lawsuit; however, it’s growing in traction as more people, and their attorneys learn about the benefits.
What makes this type of funding popular is that the process for securing it is pretty simple. Once you have an attorney representing you, you can contact a legal funding company to discuss your options. If your case qualifies for funding, the company will contact you and your attorney to provide more information about your case. From there, the company will review your case and how likely it is that you’ll succeed. Based on how much is estimated to be awarded to you, the company will make a decision on how much they can provide.
The application process
Once you get the final paperwork, make sure to read agreements and documents carefully. If you’d like, you can speak to your lawyer about them. Make sure to note any terms or sentences you don’t understand and talk to the company about them. Pay close attention to the repayment type, fees, interest charges, and what happens if you get less or no compensation. If you’re happy with the terms, review and sign the paperwork and send it back to the company for processing.
After this processing is complete, the money will be sent to you via a wire bank transfer or a check. The sooner the money is processed, the sooner you can use it to cover your everyday expenses. You can use it to pay for day-to-day expenses like rent and bills. You can also use it for new urgent expenses like medical or dental bills. A point to note is that you can’t use it to pay for legal costs or expenses.
How qualification works
In order to pass the initial qualification phase, your case must be a strong one. Since the company providing the funding depends on the plaintiff winning the case to be repaid, they will insist that your case is strong from the outset. Additionally, you’ll have to have an attorney representing you on a contingency or ‘no win – no fee’ basis. Your attorney must be informed about your application for legal funding. They’ll have to agree to the funding as the company will reach out to your attorney to request documents about your case.
Finally, you’ll need to show enough evidence that the other side is responsible for your injuries and can pay your damages, either through their own means or their insurance.
Assessment of damages
If these initial conditions are met, the company will then consider the damages you’re entitled to. These can be physical and emotional damages, losses resulting from your accident, such as lost pay from missing work. In the past, one needed to sustain severe physical injuries to qualify for compensation. This has since changed, and the law now considers and awards compensation for smaller injuries like sprains and strains.
Personal benefits of pre-settlement funding
Pre-settlement funding has many benefits for you and your attorney. For you, you’ll avoid a lot of the inconveniences of relying on your personal credit. Namely, you’ll avoid issues with your credit score if it’s low. Also, since the companies are dedicated to pre-settlement funding, the whole process can be much faster than relying on providers who require paperwork and checks with other institutions.
Since you won’t be stressing about paying bills, you and your attorney have more time to negotiate with the other side to get you the best settlement. Some insurance companies often rely on plaintiffs to settle quickly due to their need for quick cash to carry them through a hard time. Having some funding in the meantime will allow you to take more time to get the best settlement.
As pre-settlement funding differs from loans, some providers won’t require you to pay back the amount if you don’t win your case. Plus, you can use the money to pay for any bills you have. This doesn’t just apply to medical bills; it also applies to other bills like rent, utilities, and credit cards. But, again, the only thing you can’t use it on is your legal fees.
Attorney benefits of pre-settlement funding
In addition to your benefits, there are also advantages for your attorney. Mainly, it’ll take some pressure off them to resolve the matter quickly. The more room an attorney has to work on your case, the better your outcome will be. It’s always great for an attorney to build the strongest case possible, and the funding company will not interfere in any way. This is great as it means your attorney has more scope to practice law and even take the case to trial if it has a better outcome. This is all possible due to the lack of financial worry that clients can encounter when going through personal injury claims.
Applying for pre-settlement funding
In conclusion, pre-settlement legal funding is a relatively new concept. However, victims in an accident that wasn’t their fault can find comfort in knowing that they don’t have to wait long periods of time to get any funding to cover costs that can arise in the meantime, especially if they can’t work. Pre-settlement funding offers a cushion to get you through these tough times so you can focus on healing. Attorneys will also be happy to know that this funding won’t interfere in how they decide to run the case. In fact, it will provide more time to negotiate and structure the case. If the case goes to trial, there will be less financial pressure on the plaintiff so attorneys can do their best work.