Legal Finance and Legal Funding Information Center

Answers to the Questions You Have about Legal Finance and Legal Funding
What is legal finance?
Legal finance (or legal funding, as it is also known) is a fast and confidential way for plaintiffs and attorneys to receive money against the projected proceeds of a lawsuit on a non-recourse basis.
What types of lawsuits qualify for legal funding?
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» 		Personal injury
Automobile, industrial and premises (slip, trip and fall) accidents
Wrongful death
Medical malpractice
Neck, back and head injury claims
Divorce and inheritance claims
Commercial litigation
Appellate cases
What is meant by “non-recourse” when referring to legal finance?
Money advanced via legal funding is literally an investment in the outcome of the lawsuit. When the plaintiff and attorney either reach an out-of-court settlement or win the case at trial, the legal funding advance plus accumulated interest is repaid from the proceeds of the settlement. However, should the plaintiff and attorney fail to reach a settlement or lose the case in court, they owe nothing!
Who can benefit from lawsuit funding?
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 Plaintiffs: Individuals involved in personal injury, wrongful death, medical malpractice and similar lawsuits can apply for legal funding. If approved, they will receive cash they can use however they wish, and that money does not have to be paid back until the plaintiff reaches a settlement in the case or wins the case in court. For individual plaintiffs, the proceeds of legal finance can replace income lost as a result of their injury or the death of their loved one, and they can use the money to pay rent, mortgage and/or car payments, and to cover everyday living expenses.
» Businesses: A business involved in a lawsuit may also qualify for funding. For a small business that finds its ability to conduct business affected as a result of damages sustained as a result of some act by the defendant (their patented technology was stolen by a larger competitor, or their building or inventory was damaged or destroyed because of another business’s negligence are just two examples), lawsuit funding provides cash to help the business plaintiff stay in business until they can receive an award or settlement from their lawsuit.
» Attorneys and Law Firms: Just as individuals and businesses that are plaintiffs in lawsuits must wait for compensation until the case settles (unless they take advantage of legal financing), the attorneys handling those cases also get paid on the back end (or on a contingency basis). As a result, many attorneys take advantage of lawsuit funding to cover the cost of running their practices.
» Heirs: When a person dies, it can take months–even years–for the estate to be probated and the proceeds to be distributed to the heirs. Lawsuit financing enables heirs in inheritance cases to receive a portion of their inheritances up front.
» Divorce Litigants: When a divorce suit is filed, it can also takes months for the case to be settled and the assets of the marriage to be distributed to the parties to the divorce. Lawsuit funding enables a spouse to receive an advance against the projected proceeds of the divorce settlement.
How is legal finance different than a loan?
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 No Application Fees or Other Up-Front Costs: Unlike bank loans, mortgages and other traditional lending, there is no application fee, no closing costs and no other out-of-pocket charges.
» No Monthly Payments: Auto loans, personal loans, lines of credit, credit cards and mortgages all require monthly payments. The fees (similar to interest) on a lawsuit advance accumulate until the lawsuit is settled or an award is received, and then the total amount is repaid in one lump sum by the attorney when the proceeds of the settlement are disbursed.
» No Credit Check or Employment Verification: Approval of auto loans, mortgages and other traditional lending is based on the applicant’s credit history and ability to repay the loan. Lawsuit funding advances are not made on that basis, but rather as an investment in the outcome of the applicant’s lawsuit.
» No Settlement, No Repayment! The greatest difference between lawsuit funding and traditional lending is that a conventional loan must be repaid regardless of the applicant’s ability to repay it, while a lawsuit advance only has to be repaid if the plaintiff is successful in receiving an award or settlement from the defendant.
How long does it take to get approved for lawsuit funding?
Once the legal finance company has the documentation it needs, it makes a decision in 48 hours, often even sooner!
How does a plaintiff receive lawsuit funding?
1. The plaintiff (either an individual or a business) begins the process by applying for an advance by telephone or on-line.
2. The lawsuit funding company then contacts the plaintiff’s attorney to request the documentation it needs to make a decision about the case.
3. Once the legal finance company agrees to make an advance, it sends a contract to the plaintiff’s attorney.
4. The plaintiff signs the agreement, and the plaintiff’s attorney acknowledges the agreement (since it is the attorney who will actually repay the advance from the proceeds of the lawsuit when those funds are disbursed).
5. As soon as the lawsuit funding company receives back the signed and acknowledged contract, a check goes out (via FedEx, if requested by the plaintiff) or the funds are wire-transferred directly to the plaintiff’s bank.
To apply on-line for a lawsuit loan, click here.
How does an attorney receive funding?
1. The attorney completes an Attorney Questionnaire for each case for which he or she is requesting lawsuit funding, or an attorney can also apply on line.
2. The legal finance company then requests from the attorney the documents it needs to make a decision about the cases.
3. Once the lawsuit funding company agrees to make an advance, it sends a contract to the attorney for his or her review.
4. As soon as the funding company receives back the signed contract, a check goes out, via FedEx if requested by the attorney.
To apply on-line for litigation financing, click here.
Is there a trade association for the lawsuit funding industry?
ALFA (American Legal Finance Association)
What are legal finance brokers, and what do they do?
Similar to real estate and insurance brokers, who are independent agents, lawsuit funding brokers are independent agents who represent one or more legal finance companies. These brokers provide local service and a local contact, and can connect lawsuit plaintiffs and trail attorneys with providers of funding.
To learn about broker consultant opportunities in legal finance, For answers to additional questions about litigation financing and pre-settlement funding, click here.
To talk to a lawsuit funding expert, call 1-877-253-5531.


Links to Legal Finance and Legal Funding Websites: