Legal financing (or Legal funding) is the general term for any type of transaction where an individuals interest in a lawsuit is used to obtain financing. Basically, you (the plaintiff) sells a stake in the potential outcome of the lawsuit to a financier (or funder) in exchange for upfront money. If you win the case, the legal funder gets paid back their investment plus a large return, which is how the legal funder makes money. However, since the funder offers a non-recourse advance, you would not owe any money back if you lose the case. Plus, you will keep any funds already received from the legal funder. So, how does an individual determine if legal funding is right for them? Well, it depends on an individuals’ financial well-being. Some people who wishes to pursue a claim can not because of the heavy financial burden (i.e. attorney’s fees, expenses, etc). If a person was wrongfully terminated from their job, for instance, it will be difficult to keep up mortgage payments or rent. Therefore, legal funding will help tremendously. With money received from a financier, you will be able to financially maintain all while pursuing the lawsuit against your former employer. However, individuals are not the only ones that use legal funding. In face, it is often used by companies and attorneys. Legal funding isn’t limited to just individual plaintiffs. Attorneys and businesses use legal funding, too. Attorneys can leverage their expected contingency fees in order to get attorney legal funding. The money helps pay for the costs of litigation, cover firm expenses, and manage their otherwise unsteady cash flows. Similarly, companies turn to specialized commercial litigation finance companies in order to fund litigation related to all types of business disputes. Legal funding is available for any type of litigation, no matter at what stage. If needed pre-settlement, post-settlement, etc, funding can be made available if certain requirements are met. Source: LegalFundingCentral.com
