Back in the early 1990’s, a new financial instrument called litigation financing was introduced. Since that time litigation financing has grown substantially. This type of financing provides funding from a third party to help with litigation costs and cash flow, while a plaintiff waits for a settlement in the case. If you are a plaintiff who has filed a lawsuit, or you’re waiting to be paid for a case that has already settled, litigation financing may be a good funding option for you.
Litigation financing is called non-recourse funding, which means that if the litigation finance company may only be paid if the case settles. If the case loses in court, and there is no settlement, no funds need to be repaid, ever. The money is given in the form of a cash advance on the pending case. And the funding is approved based on the strength of the case, and nothing else. There are no credit checks necessary, and no employment history as with typical bank loans. The litigation financing funding is based solely on the merits of the case.
Generally, there are two kinds of litigation financing, pre-settlement and post-settlement. Litigation funding provided prior to the case settling is called pre-settlement litigation financing. Funding provided after the case settles, during the time a plaintiff is waiting to be paid, is called post-settlement litigation financing.
Respectable litigation finance companies, like Alliance Claim Funding, will evaluate a pre-settlement application by working with the plaintiff and their attorney to obtain all necessary information about the case. The application requires general information about the case, and all supporting case documents regarding the plaintiff’s claim. Since many of these cases are personal injury cases, the company would also need any accident reports, medical reports and injury information. Once the supporting documents are gathered and submitted, Alliance Claim Funding will review the case and determine if the case meets the company’s guidelines for litigation funding. If the case application is approved, a contract will be written and sent to the plaintiff and their attorney to sign. The agreement for litigation financing seeks to have the attorney and plaintiff to honor the lien filed by the company to pay Alliance Claim Funding what is owed at the time of settlement, when the funds are disbursed.