Pre settlement funding is a term that is used throughout the legal industry as an advance before a case is settled
. Pre settlement funding is unlike a standard bank loan. When you receive an advance against a legal case it comes as non-recourse. This means if you lose your lawsuit you are not obligated to pay back the loan.
There are essentially two types of legal cases which a plaintiffs may receive an advance against. A plaintiff may secure funding for a personal injury or a commercial litigation claim. Prior to receiving an advance the plaintiff will need to give the lender permission to contact the attorney.
The initial contact is to get a better understanding of the case and to request documentation on the lawsuit. This documentation is used to get a better understanding of the case. The information is typically reviewed by an underwriter. The underwriter is a representative of the company and is generally an attorney that has a good understanding of the type of lawsuit.
If the underwriter believes the defense is liable there is a good chance the case will get funded. Pre settlement funding is based upon strength of case. The stronger the case the better shot a person has in receiving an advance against the claim.
If the lender decides to provide pre settlement funding for the case they will immediately draw up contracts. Included in the contract will be the amount of money the lender is willing to provide along with the rate. The rate can be a flat rate or a compounded monthly rate. If the plaintiff receives a compounded monthly rate there will be a payment schedule outlining the costs over a set period of time.
If the plaintiff decides to accept the offer the plaintiff can be provided the advance through a wire or check.
Pre settlement funding can be an option that is used if the plaintiff doesn"t have the staying power to continue down the litigation path. It provides a financial stop gap between an early premature settlement and full compensation.