Lawsuit Loans Gain in Popularity with Plaintiffs

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Lawsuit loans are growing in popularity

Lawsuit loans have been growing in popularity in recent years. They are often chosen by plaintiffs to extend their lawsuits so a higher settlement might be awarded. The popularity is thought to be due to the economic downturn and related job losses making lawsuit loans a more viable choice for people who are struggling to keep their lawsuits alive. Many need help paying bills and to keep up with mounting legal bills, in the months and sometimes years they wait for a lawsuit settlement.

Lawsuit loans keep cases alive

At one time lawsuit loans were used for very large class action lawsuits and large personal injury cases.  However, today attorneys are advising their individual clients to look into this option to help keep their cases alive.  Many plaintiffs are dealing with the deep pockets of insurance companies and corporations who try to extend the lawsuit and drag it out as part of their strategy.  Their hope is that plaintiffs will run out of money and bow out due to the large financial burden they are carrying while waiting for a settlement or verdict.  They try their best to hold up a verdict in many cases in hopes of a low settlement.

Lawsuit loans help avoid low settlements

Most legal advisors counsel their clients to never take a low settlement without a full understanding of the financial consequences of such a low award.  But, in many cases plaintiffs are so stressed and mentally tortured by the financial situation they are in, they have no choice but to either drop the case or take a low settlement.

When a lawsuit loan company steps in and provides funding for a lawsuit the money is not provided as a loan.  Lawsuit loans are a financial arrangement made between the lender or Investment Company and the plaintiff.  A lawsuit loan is defined as funding borrowed and will be paid back in full when the lawsuit is settled, or a verdict is reached.

Lawsuit loans only repaid if plaintiff wins case

Lawsuit loan funding is non-recourse, which means the money is advanced and only needs to be paid back if the lawsuit reaches and positive conclusion.  If the event the plaintiff loses, the money is not required to be paid back.

Typically the fees paid to a lawsuit loan company average about 10% of the total expected settlement. Unlike typical bank loans, lawsuit loans are not paid back monthly.  They are only paid back when there is a final settlement reached, or a verdict in the case.