The Essential Laws of Money Explained
Types of Litigation Financing
Litigate finance refers to the prior cash payment given to plaintiffs who have filed a case but do not have enough money to settle the case. The main role of litigation financing companies is to fund the plaintiffs in the case instead of giving them a loan. If the plaintiff is seeking the financial assistance from the litigation financing companies, the current or previous financial position of the plaintiff is not considered.
The litigation finance companies charge interest and fees differently. It is true to say that these litigation finance companies assume a lot of risk due to their investment in the lawsuit as opposed to investing in the plaintiff. This is because it is possible for a good case to be thrown out. Due to the risks involved, these litigation finance companies charge high-interest rates on the cases that are successful so that they can make up for the cases that have been unsuccessful. Some funding companies prefer to use multipliers overcharging interest rates for their financial assistance.
The main purpose of the litigation finance companies is to provide the plaintiff with any financial assistance they might need to fight a case. If you have a lawsuit, and you do not have the financial resources to settle the case, you are qualified for the funding. The advocate who is representing your case is prohibited by the lawyer to offer you the means to settle the case. In spite of that, the advocate has a right to inform you about the best financing option that you can depend on. Plaintiffs have several funding options they can seek financial assistance from.
The first type is the plaintiff’s funding. This means that the plaintiff does not have to repay the loan if the case is lost. This litigation finance is like a debt and attracts high-interest rates. The funding company only takes away a certain percentage of the amount paid after the case has been resolved.
The plaintiffs can also use the post-settlement financing. This form of financing is easily available to the people who are not sure when they will get the compensation.. It is however short-term cash advance and on a recourse basis.
If you are an injury victim, you are qualified for the financial assistance from these companies. Attorney litigation financing is also another financial choice. You can either pay or not pay after the case has been resolved successfully.
Appellate financing is also offered by the funding companies. It also provides funds to plaintiffs so that they can satisfy their monetary needs and have to pay if the case is successful.
There are very many plaintiffs that rush to litigation finance as the answer to their current cash flow problems without completely understanding the facts behind litigation funding. It is good to research on the company before you get any funding from them.