Who Is Preferable For Pre-settlement Funding?

Pre-settlement funding is a way of financing a lawsuit or receiving money from a legal case before it is concluded

. It is not for everyone. There are several requirements that must be met before a lawsuit financing company will consider an advance. After that, each case is determined on an individual basis.

Plaintiff

The person suing in a case is usually called the plaintiff. The person receiving the financing must be a plaintiff in a civil lawsuit. The reason for this is that defendants do not receive money from a legal action and would have no additional means to pay back the advance. When a plaintiff wins a case, the award in damages is monetary.

Favorable Case

Suing someone does not mean a person will automatically get money. Many factors go into a lawsuit's outcome, such as what type of suit it is, what happened to the person and whether or not the defendant is likely liable. If the plaintiff does not have a reasonable chance of winning the case, the finance company will probably not advance the money. If the plaintiff does not win the case, most companies do not require the money to be paid back. Personal injury suits are usually considered favorable, as are discrimination and class-action cases. The lawsuit funding company will generally speak to the plaintiff and their attorney before making a determination about advancing money. Additional research and information is also usually compiled before coming to a final decision.

Settlement

Some cases do not go to trial. Sometimes, the two parties reach an agreement before the trial begins. This is called a settlement. It is legally binding and involves a payment from the defendant to the plaintiff. The sum is usually less than what the person is asking for in the lawsuit. It may be worthwhile for the parties to settle the case simply to halt the legal fees and expenses associated with a trial. Expert witnesses, filing paperwork and research all cost money. Settling before a trial reduces how much both sides must spend.

Insurance Involved

Most lawsuit financing companies require an insurance company to be involved on behalf of the defense in order to consider a pre-settlement loan. One reason is that insurance companies will often be willing to settle when a defendant is not. Medical malpractice cases, for example, frequently settle against the wishes of the doctors who feel they did nothing wrong. Another reason insurance companies play an important role in determining a lawsuit advance is that some businesses cannot afford the potential amount of the verdict damages. When a plaintiff is asking for $4 million and the company being sued has no insurance, it is unlikely the plaintiff will ever see the money even if they win. A finance company will look into this issue as a means of finding out if the borrower will be given the funds to repay the advance.

Once the determination is made to advance the money, a plan is made on how it will be paid back. The funding is usually disbursed within 24 hours, to be paid back when the case is settled or the plaintiff wins.

by: Christine Harrell

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