How are Lawsuit loans helpful for someone with an injury?

by Silvia W. blogger

Lawsuit loans or pre and post-settlement loans are usually not loans they are money lend by a third party to pay for their legal settlement. For the most part, legitimate financing will be used by the plaintiff while legal defense funds are usually used by the defendants the money that has been received from the legal financing can be used for any purposes be it personal use or litigation while the money received from the legal defense, funds is strictly used for litigation. The legal financing the company lends nonrecourse cash advanced to the litigant; the legal financing the company receives a percentage share in the settlement.

The legal financing company lends a lump some money to the litigant. In any case, if the litigant loses the case, the legal finance company stands to gain nothing. And they lose all the money they’ve invested in the case which means that the litigant won't need to repay anything, from the time the litigant received the money from the finance company he/she stands to pay nothing until the case is settled and the judgment is made in favor of the litigants

A brief history

Although lawsuit loans are a relatively new concept in the US, they are not unheard of, and they are prohibited and restricted, although there are traditional sources that help the injured plaintiff the plaintiff get to use the money received from the lawsuit loans while they pay for the cost of litigation and for personal uses too .

Who qualifies for lawsuit loans?

1.       A full-time advocate must be hired 

A person who qualifies for the lawsuit funding is those who have hired a fulltime advocate helping to settle with the case. If the litigant loses the case, the lawyer is not paid. This applies to the third party that finance with the litigation also too it does not receive any money from the litigants.

2.      The person must also have a personal injury for the companies to fund you

The lawsuit must finance personal injury too.

3.      The person who you filed a case upon should be one who can pay you off if she/he /it loses.

Another important aspect is that the person or company you’re filing a petition against should be well off so they can pay you off.

4.      The transaction should get the signature of the attorney

Another thing that’s important for the legal funding is that the attorney should have signed the petition and agreed to fight out the case in favor of the litigant.

5.      The plaintiff must have a strong case

For the finance company to lend funds, it’s important for them to know that the case file is a strong one and in favor of the plaintiff. No company would want to run into a loss, and it’s very important for the plaintiff to come with a strong case that favors them. You can check for more information.

What are the befits of lawsuit loans

Lawsuit is expensive

When the lawsuit progress at a very slow rate the case can be dragged for months and months if not years and the lawsuits are expensive and the cost of litigation and expense of supporting oneself can be strenuous on anyone, and the lawsuit loan helps ease this problem.


Another reason the funding benefits the litigant because the person seeking a lawsuit loan is usually one with injury, and the legal financing company also approves the loan if the person has personal injury and when a lawsuit is on the brisk of happening the cost of litigation and the personal costs of the litigant are very high.

Gives you a lot of time

The lawsuit loan company will give you a variety of choices to choose the best settlement. They have great offers, and when the injured person takes time to respond to the settlement, they are patient, and they would give plenty of time to the plaintiff to choose the best settlement for himself/herself.

Demerits of lawsuit loans

The finance funding company stands to win much

The lawsuit loans company can get a lot of profit if the litigant stands to win. And that is not a good thing the company will only invest if they stand to win, but all the money the litigant receives from the company or person who stands to lose is taken away from the litigant and given to the funding company. The interest rates are ridiculously high, and the plaintiff stands to lose a lot.

The litigant settles

It is found on a recent survey that the people who initiate the lawsuit eventually gives up and settle for a lesser amount of money.

Ethical violation

Some of the interest rates of the funding company is too expensive, and champerty laws too are violated.

The company will not be interested

Another demerit of the litigant is that the company will not approve all cases and finance you. These companies are very selective, and only if they stand a chance to gain something, then would they invest their money. The funding company has lots of experience in the field, and they would often reject to lend a lawsuit loan to anyone who stands a chance to lose.


Therefore it is important to weigh the pro and cons before taking up lawsuit loans. Lawsuit loans are very helpful for anyone who is injured and doesn't have enough money to pay for their litigation fees and the case might drag on for a long time before it comes to a conclusion. Therefore, it’s important to have good financial backup. Lawsuit loans also have many demerits because the company stands to win a lot if the litigants win the case and the litigant too stands to win if he/she loses the case because he/she owes nothing to the lawyers or the funding company.


It is to be mentioned that the US has just recently approved lawsuit loans, and before 1997, it was not practiced in the US, and therefore, there are various limits to the financing.

About Silvia W. Advanced   blogger

65 connections, 0 recommendations, 135 honor points.
Joined APSense since, August 18th, 2018, From Los Angeles, United States.

Created on May 22nd 2019 01:36. Viewed 58 times.


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