In the United States alone, tens of millions of civil legal cases get filed each year. Of these, state courts handle at least 20 million lawsuits.
With such an immense number of civil filings, it’s no wonder they take months or even years to conclude. As a result, plaintiffs end up waiting for a long time to receive compensation.
If you’ve filed a lawsuit yourself, litigation funds can help tide you over as you wait for your case to resolve. We’ll discuss the basics of how to get litigation funding in this guide, so be sure to read on.
What Is Litigation Funding?
Litigation funding is also known as lawsuit advance or pre-settlement funding. It allows a plaintiff to advance a portion of their anticipated settlement. Plaintiffs can then use the funds to cover some of their legal costs or even personal expenses.
How Does Litigation Funding Work?
Litigation funding is a financial service provided by third-party financing companies. They don’t have any involvement in the lawsuit. They simply purchase an interest in the lawsuit and its expected damages or awards.
Suppose your lawyer expects you to recover $20,000 if you win your case. A litigation funding provider can monetize part of that, say $5,000, even before you receive the reward. If they approve your application, you’ll acquire the approved litigation funds immediately.
Why Consider Applying for Litigation Financing?
There are about 30 steps in a trial, starting from the pleadings phase to the appeals stage. These numerous steps are some of the key reasons lawsuits take many months or years to conclude.
Plaintiffs won’t receive their awards unless and until they win. What’s more, the entire trial process can take longer with the addition of a criminal appeal.
With litigation funding, you can tap your award as early as the initial stages of the case. The application process can take a few weeks, but once approved, you can get the funds as soon as the following day.
Moreover, most litigation financing services are non-recourse. This means you won’t have to pay back the cash advance if you lose your case. The financing company would only require repayment once you receive your reward.
What’s more, you don’t need an excellent credit score to be eligible for litigation funding. Even if you’re part of the 30.9% of US consumers with a subprime score, you can still get approved. Financing companies base their decision on a case’s merits, not a plaintiff’s creditworthiness.
How To Get Litigation Funds
Most litigation financing companies require plaintiffs to have a lawyer. Another requirement is an active lawsuit, which means it’s already in the case docket. If you meet these, you can start the online application process in which you only need to fill out forms.
The financing company then reviews your application. If pre-approved, one of their representatives will call you to request case materials. Your lawyer will share some of your case documents with the funding provider.
From there, the financing company will completely evaluate your case. Provided your case has strong merits, you most likely will get approved. In this case, you’ll receive an official agreement that you and your lawyer need to sign.
You’ll then receive your funds within a day or two.
Litigation Funding Can Be Your Saving Grace
As you can see, litigation funds can give you the capital you need to get through your lawsuit. You can use the money to pay some of your lawyer’s fees or even your mortgage, rent, bills, and groceries. If your case arises from personal injury, you can also spend some of the funds on medical treatment.
Just be sure to choose a reputable financing company under the guidance of your lawyer.
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