There are two main reasons why one would want to apply for legal funding or pre-settlement funding as it is sometimes also referred to. The first is when an individual wants to file a lawsuit but realizes that they do not have the funds to do so. The other situation is when your case is on-going but because it takes longer for lawsuits to be settled, you might find yourself in a situation where you are struggling to meet your everyday expenses.
It is important to emphasize that legal funding is not a loan, instead, it is money that is provided by legal financing institutions to help tide you over the difficult situation you are encountering as your case goes through the legal system. There are two types of legal funding. With litigation funding, the money you get must be used to meet your litigation expenses only, such as lawyer’s fees. Direct plaintiff funding gives you the freedom to offset your personal expenses as well. The funding is provided in a lump sum on the understanding that the litigant pledges a percentage of the settlement to the legal funding company if they win the case, and that is why it is sometimes referred to as an advance to the litigant. If the litigant loses the case, they are not obliged to repay the money they had received from the financing institution.
When thinking of applying for legal funding, the first thing you need is to hire a good lawyer, and preferably one who understands the legal funding process well. This is important because you will rely on your lawyer to refer you to the best legal funding company. The lawyer should also help you analyze the two funding types available, and advise you on the best. So you need to talk with your lawyer to ensure you both fully understand the issues at hand.
With the help of your lawyer, you need to ask yourself why you think you need the funding, and if you can actually pull through without it. To help you put matters into perspective, you need to remember that if you win the case, the lending company will take the agreed percentage of the settlement amount. Your lawyer will also need to be given his share as per the engagement agreement. Carefully calculate, using both the best and the worst-case scenarios and see what you are likely to be left with. Also examine other options that are open to you, such as getting a soft loan from those who are nearest and dearest; those who are always there to lend a hand. If after considering all this you feel that going with the lending company is the best option, then you are ready for the next step.
This next step is where you need to be honest with yourself. You may require the help of your lawyer. You need to look at your case objectively and ask yourself, on a scale of 1 to 10, how good is your case? What are the chances of winning? If the facts reveal that your chances are high, move forward with confidence on your funding journey.
The next step is to search for a funding company. Before you settle on a specific company, it is advised that you ask your lawyer to recommend a few to you so that you can compare them. You can do the comparison using criteria such as success rate, interest rates, positive customer reviews, and general customer care. It is tempting to go with the cheapest company, but even your lawyer will advise you to not compromise the quality of service with cost. It is good to note that some lending companies are open to advancing you more money down the line should you need it, so you can inquire if the company you are leaning towards does this.
Now that you have settled on a company, you need to approach them. You can do this with your lawyer who should be well prepared to defend your case to the company. After the initial meeting, the company will give you an application form to fill in with the help of your lawyer, and then submit it to them and wait for the company to get in touch.
Once the lending company receives your application, they will contact your lawyer so that he can provide further details regarding your case. When they are satisfied that everything is in order, the documents are passed on to the underwriting department of the lending company who then goes through your application to see how strong your case is.
In the event that the lending company approves your application, they will inform your lawyer and transfer the funds into your bank account.