Since the 1990’s, lawyers and their clients have been introduced to the idea of using an independent third party to help fund litigation costs or to help with their cash flow while waiting for their settlement to pay. If you have a pending case or you are waiting to be paid on a settled case, lawsuit financing may be right for you.
Generally speaking, lawsuit financing is non-recourse funding. That means that an investor or a funding company can look only to the proceeds of your lawsuit or settlement to be paid back on a cash advance made to you based on your case. They cannot look to you personally for repayment because they are not lending you money. They are advancing money based on their assessment of the merits of your case. The advantage to this over credit cards and other loans is obvious, if you lose, you do not have to repay. Moreover, the transaction will not show up on your credit report.
There are two types of non-recourse litigation financing—1. presettlement and 2. postsettlement. An advance on a case before it settles is called a presettlement advance. An advance on a case after it settles is called a postsettlement advance.
To evaluate whether to invest in a case that has not settled yet, a funder will ask that an application be filled out by the attorney for the plaintiff. The application will seek general information about the case and documents supporting the plaintiff’s claim. Typically, these are the accident or incident report, the Complaint, the Answer and medicals showing the injury. Once these documents are received, underwriters for the funding company will determine whether the case meets that company’s criteria for funding. If the case meets that criteria, a contract will be generated and sent to the attorney for the plaintiff for the plaintiff to sign. The attorney agrees to honor the lien of the funding company and to pay the funding company what is owed when settlement funds are able to be disbursed.
To evaluate whether to invest in a case that has settled, a funder will ask to see the Settlement Agreement and Release, the case caption and the retainer agreement, in the case of a postsettlement advance to the attorney and the closing or distribution statement in the case of a postsettlement advance to the client. Funding can occur in as little as 24 hours. American Asset Finance, LLC. and its principals have been providing litigation financing since 1997. They are one of the oldest and most respected companies in the business. You can find them at www.amasset.com. They will quickly tell you whether lawsuit financing will work for you.