Legal Financing – Some Different Options

Jul 8
10:33

2011

Hina Khan

Hina Khan

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Legal financing is offered by different companies offering different options. Whether you are searching for pre settlement funding or post settlement funding, you should be aware of those options.

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There are dozens of companies that provide legal financing in the United States and abroad. Legal financing can be used by both the plaintiff and the attorney. If you are considering borrowing against your lawsuit,Legal Financing – Some Different Options Articles it will be imperative you understand the different types of options. There are no two companies alike as many prefer different types of cases, different rates, and different financing options at different amounts. In this article we will discuss the different types of cases, different rates, amounts and financing options.

Legal financing is offered on a pre settlement and post settlement basis. This means a client can borrow money before or after a case is settled. The different types of cases that are offered by these companies are personal injury and commercial litigation cases. A personal injury may be an auto accident, wrongful death, slip and fall and medical malpractice. A commercial litigation claim may be securities fraud, copyright infringement, patent infringement and financial malpractice.

While most companies in the United States prefer personal injury related cases, most outside of the states prefer commercial cases.

The rates are also different between the different types of cases. A company may lend money on a compounded monthly rate, quarterly compounded, flat rate, times factor and a percentage of the proceeds plus the principle of the loan. Most companies that provide legal financing against personal injury cases will offer compounded monthly rates, flat rates or quarterly rates; Companies offering clients legal financing against commercial cases may offer compounded or quarterly rates, time's factors or percentages on a case. The companies that provide money against personal injury cases tend to charge less than those companies offering financing against commercial cases. All companies tend to charge better rates on cases that are already settled. This is because there is less risk to the investor.

The amounts are also different for each company. There are companies that will lend just a few thousand on a case and others that will provide lawsuit loans for million dollar request. The amount of money will be dependent upon the type of case, estimated value of the case and the comfort on the underwriter.

The different financing options may include a lump sum, buyout or line of credit. If a person is borrowing a lump sum they may max out the initial advance. This means the plaintiff is borrowing the maximum amount that a company will provide on one case. There are other companies that will buyout an existing legal financing contract. A company will always want to hold the first position or lien on the case so the only way to borrow additional monies from another company is for the company to buy out the existing contract from another company. If you decide to borrow a small fraction of what your case is worth you may open a line of credit. A line of credit is used as a way to only borrow what you need with an option of coming back at a later date for an additional advance.