Disclaimer: Consumer legal fundings and advances are not loans under applicable financing laws. Rockpoint’s products are non-recourse, meaning if you don’t win your case, you don’t have to pay us back. Receiving financial support in connection with a legal case is typically (and oftentimes incorrectly) referred to as a “lawsuit loan” or “loan.” Therefore, for the ease of search references, these terms may be used in this context to refer to our funding products, but we maintain our separateness from consumer loan products in all legal aspects.
If you’re seeking compensation through a civil lawsuit, you may have a big paycheck coming to you — eventually. However, the process is likely taking longer than you expected. In the meantime, you may also face mounting expenses, some of which are accruing interest while you wait for your settlement check to come through.
The truth is that many plaintiffs don’t pay these expenses out of pocket. Instead, they rely on legal finance solutions to help cover costs during the lawsuit.
Here are a few innovative options to help you finance your lawsuit without impacting your settlement or trial payout.
What Is Legal Financing?
Legal financing allows lawsuit plaintiffs to secure funding to cover their legal costs while they wait for compensation payouts. It involves several different options.
Typically, legal funding uses the eventual lawsuit payout as collateral, giving the plaintiff an “advance” on this payout. Once the insurance payment or lawsuit payout hits their bank account, they repay the plaintiff funding service.
Legal financing gives plaintiffs access to capital for legal expenses and other costs resulting from their accidents and compensation processes. The main goal is to give accident victims access to justice when they may not be able to afford legal costs up front.
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Types of Legal Finance Options
You can find many types of legal funding available. Some are non-recourse financing, meaning you don’t need to pay them back should your lawsuit settlement fall through. Others operate like a traditional loan that you repay over time with interest.
If you’re wondering how legal funding supports plaintiffs and attorneys, here are a few common legal finance options.
Pre-Settlement Funding
Pre-settlement funding is an advance on your eventual settlement. This type of advance comes before your case has settled out of court or a judge has awarded you compensation.
It works like this:
- You apply for funding.
- The funding team reviews your case to determine the likelihood of your winning and, if so, the amount of money you may receive.
- The financing service offers you an advance amount.
- If you accept, they send you a lump sum payment within a few days.
If you eventually secure compensation through your case, the financing service will take a pre-determined percentage of the settlement to repay your advance. This is usually the amount of the advance plus a fee.
But if you lose your case, you won’t owe anything to the financing company.
Post-Settlement Funding
Post-settlement funding helps bridge the gap between when you settle your case and when the insurance company or defendant issues your payout. The process of actually delivering your compensation can sometimes take several weeks. Insurance companies have to process the check, work through any technical issues, and navigate unpaid liens before you can receive your payout.
Qualifying for post-settlement funding is even easier than pre-settlement funding. The legal finance company knows you have a check coming and exactly how much it’s worth, providing risk mitigation. You could have money in your pocket within a few days rather than waiting weeks or even months to receive your settlement check.
Lawsuit Loans
You may also see lawsuit loans when searching for legal financing options. These operate similarly to traditional loans. You borrow a lump sum from a lender, then make monthly payments with interest. Once you receive your settlement, you can pay off the loan or continue making payments for the set term.
Lenders see lawsuit settlements as an alternative asset class that could allow them to grow their investments. This is why you’ll likely see more and more lawsuit lenders crop up over the next few years.
Lawsuit loans are an option to consider if you don’t qualify for pre-settlement or post-settlement funding. However, these loans are generally more expensive, as interest rates can run up to 60%.
Many lenders also have credit score and income requirements to ensure you can repay the loan if your settlement falls through. Unlike pre-settlement funding, lawsuit loans aren’t non-recourse, so you’ll still owe the full amount if you lose your case.
What Can Litigation Funding Cover?
When you secure legal funding, you can typically use it however you want to. Plaintiffs often use legal funding to cover expenses such as:
- Legal fees and attorney costs
- Medical bills resulting from their accidents
- Medical equipment to aid their recovery
- Lost wages and loss of ability to work
- Debt payments and credit card bills
- Everyday expenses (groceries, housing costs, utilities, etc.)
- Funeral costs after a wrongful death incident
Whether you were involved in a car accident, a slip-and-fall incident, a medical malpractice event, or any other type of personal injury case, you’re likely facing a mountain of expenses. You can use litigation funding to help make ends meet while awaiting your settlement check.
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Seek Legal Finance Solutions From Rockpoint Legal Funding
You’ll find a wide range of legal finance options on the market, but not all have fair terms and affordable fees. If you’re considering pre-settlement or post-settlement funding, Rockpoint Legal Funding has you covered with flexible, non-recourse funding.
Apply today through a quick online application. We’ll review your case and let you know whether you qualify. If so, you’ll have money in your account within a matter of days, with no interest, hidden fees, or repayment liabilities, even if you lose your case.
If you need help understanding legal funding and want to schedule a free case review, contact Rockpoint Legal Funding today. Call 855-591-2489 and find out whether you qualify for our legal finance options.
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