What is legal financing and how to get it approved?
Legal financing is a type of loan which the plaintiff gets while pursuing a lawsuit. Such financing is carried out by 3rd parties (usually the lending institutions) to help the plaintiff meet his legal expenses. In some cases, as in the case of personal injury, such a financing (also known as personal injury loan) assists the plaintiff to meet his medical expenses. This type of financing may appear like a loan, but there is a huge difference. Here, the borrower or the plaintiff is under no liability to repay the amount out of his own pockets.
As per the conditions, the financing company offers the loan towards the beginning or the middle of the trial on condition that the plaintiff would give it a certain pre-decided share of the money received at the end of the trial. In most cases especially when the person has received personal injuries, the court grants compensation to the victim. The lender or the financing company would only offerlegal financing if it senses that there is a strong chance of the court allowing monetary compensation. Thus, the lender is working under his own personal profit-driven agenda.
However, in case, the plaintiff loses his lawsuit and doesn’t get any money at the end of the trial, then he is not required to repay the financer out of his own pocket. The financing company, in such a scenario, would be at a loss. Thus, there is a huge element of risk involved & associated with legal financing.
In order to get it approved, the borrower will have to convince the lender that he stands a good chance of winning the court battle. Thus, there is no eligibility norm as such. The decision to grant or not to grant a loan lies solely on the discretion of the lender. It is a matter of perspective as well. Different lending institutes may look at the case differently
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