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Types Of Lawsuit Funding And Why Some Companies Offered Settlement Loans
Lawsuit finance companies, also called litigation funding, settlement finance, or just lawsuit cash, is a separate market that helps individual and small business plaintiffs in many ways by providing funding for personal attorney fees, legal costs, and other operating expenses. Lawsuit finance companies provide an advance of cash that typically becomes available within days following the successful conclusion of a lawsuit. Many law firms that offer lawsuit cash services have been specifically licensed to do so by state boards or commissions. They are independent of any other insurance company or lending institution and do not make loans themselves. Here's a good read about loan, check it out lawsuitssettlementfunding.com


The U.S. government has been instrumental in the development and growth of this non-loan, non-debt industry. In fact, the Federal Trade Commission has aggressively cracked down on fraudulent companies that prey upon vulnerable consumers. According to the Consumer Financial Protection Bureau, the five most common types of settlement funding are:


o Pre-settlement funding: This is the most widely-used form of lawsuit funding. Pre-settlement funding works in much the same way as secured credit cards, wherein a plaintiff needs to open a bank account and deposit a certain amount of money into it. When a lawsuit ends without a settlement being paid out, the credit card company will foreclose on the account if the plaintiff does not have enough money in it. Because of this fact, pre-settlement funding allows plaintiffs who cannot afford their legal fees to have the money readily available to them. To gather more awesome ideas, click here to get started lawsuitssettlementfunding.com.


o Commercial litigation funding: Commercial litigation funding companies typically provide financing to commercial plaintiffs in a totally different way than those provided to personal plaintiffs. Instead of acting as lenders, commercial litigation finance companies purchase a portion of the potential settlement fee in exchange for a percentage of the potential award. If the settlement fee is won, the commercial litigant gets the money that they are owed, and the company receives a percentage of the potential amount awarded in compensation. Because of this reason commercial litigation funding is not actually interest free, and the amount received from a successful settlement will significantly increase the amount of money that must be paid out to the company.


o Insurance company-sponsored litigation funding: Another common form of lawsuit funding comes in the form of an insurance company helping to settle a case. The insurance company will purchase a portion of the potential settlement fee in return for being able to make a claim against the defendant if the case settles without going to court. Because of this high risk to the insurer, the insurance company must provide a significant amount of upfront capital; however, since the company stands to make money even if the case is lost, they are often willing to negotiate with the plaintiffs and their attorneys in order to settle for a less than 100% settlement. In some cases, the insurance company may choose to settle with the plaintiff and their attorney for a large sum, but may not provide any other support to the plaintiff if the case is lost. Kindly visit this website https://www.britannica.com/topic/civil-rights  for more useful reference. 


Many of these methods of lawsuit funding can be seen as a way for attorneys to get some "skin in the game" when they are facing tough times financially. While it may not seem fair, some attorneys will accept a settlement and then try to get their clients to hire them back the next year, or try and pressure the plaintiff into taking out more than one unsecured loan with their new attorney. While the lending institutions may state that the process is done in the same way as any other loan, these lawsuits could get quite complicated, especially if both parties agree to pre-qualify the plaintiffs. Most plaintiffs do not have a lot of experience working with lending institutions, so it can take some time to navigate the lending institutions and decide if they want to allow them to use this method of lawsuit funding. It is important to watch for this because it can often be used to lenders' advantage if the plaintiff cannot get funding from the bank.


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