Pre-settlement advances and the adventure after approval
Pre-settlement advances and the adventure after approval
We know that in a time of need, and with a pending lawsuit, plaintiffs turn to legal funding companies to help them out of tough situations. They need money to live, to pay bills, and to keep working towards the best settlement outcome they can possibly achieve.
You work together with their lawyers, assess the situation, approve the case and provide that help!
Let's take a look at what happens after that and at the journey your advance payment takes for both you, and your client.
Up until now, you've sent the payments in generally one of two ways. By Check; or by Bank Wire.
Your plaintiffs will also fall into two categories. One's with solid banking relationships; and one's without.
No matter which category your client is in the way they want it, and the way it will eventually end up, is in cash.
Category One those with Bank Accounts will generally elect to have a bank wire sent. For you, and depending on your banking relationships, you can expect to pay anywhere from $20-25 per transaction.
If they don't want it sent into their accounts, for whatever reason, they will elect to join Category two those without a solid banking relationship and have a Check sent out.
For you, most likely need a signature receipt to confirm the payment has been received by the right person, so you send it by courier typical overnight, as fast funding is what the industry and your clients call for. Rates vary typically falling around $20-25.
Now regardless of how you've sent the advance you're out of pocket, reducing your cash flow. Yes you will recoup costs at settlement payout, in 18mths time, but it has cost you and the client more money by the time it is all said and done.
So that's the impact of the advance on your side of the table and the business itself what does the story look like for the client on the other end?
Either way, naturally, you want to make sure you can put as much money in their hands as possible.
With a bank wire, expect your client to pay $10-15 as an incoming wire fee.
If they are in desperate need of the money, they will be anxiously calling you to find out when the funds are. Wires are pretty quick, generally a few hours or less - so we can assume it's those waiting for the courier to ring the door bell.
After your check arrives, your client will be eager to cash it. They head to a bank, and falling in that second category of client without a bank account, or one in good standing it may or may not be their own branch.
Without knowing your legal funding firm, or the person trying to cash the check the bank is not going to automatically cash the check, even if an account is held at that bank; the funds will be put on hold until it clears, typically 3 5 business days.
Now if your client can't, or doesn't want to wait that long, they may, and often do, try one other bank just in case.
With no luck at either bank, they will turn to a Check Cashing Store some are open 24hrs a day, and they know they can get cash for their check as the name would suggest!
Typically valid ID is required, and potential verification of your business will take place in order to confirm the validity of the check. Not confirmation that the funds are available just that your business is real, and the check is most likely real. In some cases, the store may call you to confirm you issued the payment.
Depending on the store location, city, state fees for turning that check into cash will vary typically around 4-5% - and potentially justified for the risk involved with cashing a check with an unknown payee and payer but that is for another time. Your client needed the money, and this store, after you of course, have helped them - so a small deduction from funds they didn't even have yesterday is more than ok, they are just happy and relieved to have cash to get by.
If there was a faster, and less expensive way to send your clients their legal advances, with guaranteed delivery, and a way to keep an active track of when and where payments have been received, would you look into it? Improve your bottom line, fund clients faster.
If your clients knew they could get cash faster, easier and MORE of it in their pockets would they want you to look into it? Would they come to you first? After all, it's all part of the journey.
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