Legal financing provides an individual with the resources in the form of a cash advance to fight a case. There are various types of legal financing and individuals can seek professional help as it is offered to anybody who lacks the means to fight a case if the said party meets the criteria.
Litigation financing is available for plaintiffs, attorneys and law firms, to meet immediate financial requirements. Generally, lawyers are not allowed to provide means to their clients but, they can suggest the various litigation financing options to their clients.
Funding of plaintiffs is offered on a non-recourse basis wherein the plaintiff does not have to repay the loan if the case is lost. This type of funding is like a debt and attracts high interest rates. Only a certain percent of the expected settlement amount consists of the amount received from plaintiffs funding.
By far the easiest form of legal financing is post-settlement financing which is a short-term cash advance and can be of great help when there is a delay in receiving the settlement, after the case has been resolved.
Generally this form of financing is easily available as in the evaluation of the legal financing companies the risk is far less as the case has been resolved and the delay is at best procedural.
Yet another form of legal financing is known as appellate financing that provides the attorneys the means to pursue a legal case. Under this kind of financing funds are provided on a non-recourse basis to plaintiffs, to fulfill their monetary necessities. For the legal financing company offering this form of financing the profitability is higher because if the case is successfully resolved, the company receives a decent portion of the settlement.
Attorney legal financing involves loans to attorneys, on recourse, as well as non-recourse basis as funding companies may postpone the payment of interest till the case is resolved. There are companies that are willing to lend money to people who need it in exchange for either a portion of the settlement, or a monthly fee. Many funding companies buy structured settlement payments from injury victims while many others provide lines of credit, depending on a law firm’s profile. The companies usually set a limit for the provision of funds and many companies make it obligatory for the law firms to settle all their debts, before the ending of each financial year.
Last Updated on : 1st August 2013