How To Get Legal Costs Covered Through Settlement Funding Without The Risk

Lawyer’s fees can be an expensive business. For those who can’t raise the money or those fighting organisations with deep pockets, settlement funding can be a godsend.

How it works

Legal financing is big business. Those who offer it are not lawyers, but funding companies who pay your legal costs in exchange for a share, usually 10-15%, of any favorable judgement sum or settlement that you receive. No monies are payable to them until the case concludes, and if it proceeds to trial and you lose, you don’t have to repay any money that the funding company has invested in the case. Although settlement funding means losing a chunk of your compensation, there are clear advantages. For example if you were to raise a loan or pay the fees yourself, you would have to pay back the monies spent on legal fees even if your case goes wrong.

Eligibility

Like insurers, these companies have to assess their risk. As well as ensuring that their potential reward justifies the expense, they will be scrupulous in ensuring that your claim has a very good chance of success. Their legal teams will therefore go over the merits of your case with a fine toothcomb, to ensure that their risk is minimized.

This type of financing is mostly used for Personal Injury claims, but is also available for commercial cases and worker’s compensation cases. Normally you will have already engaged an attorney who is happy to run the case on a contingency fee basis before seeking this kind of funding.

Companies to use

There are many providers out there, some even offering lump sum advances on settlements if they feel your case is very strong, but it’s important to find the right one. The American Legal Funding Association is a non-profit organization set up in 2004 which seeks to establish standards for the industry and currently has around 20 members on its books who provide settlement funding. It is estimated that around 90% of current legal financing has been carried out by these members.