Submit an Application: The plaintiff (the person filing the lawsuit) submits an application to a pre-settlement funding company. This application usually requires details about the lawsuit and personal information. at the lawsuit loan company
Case Review: The funding company reviews the application and may request additional documentation or details from the plaintiff’s attorney to evaluate the strength of the case.
Determine Eligibility: The company determines whether the plaintiff and their case qualify for funding based on the case’s merit and potential settlement amount.
Approval: If the case is deemed strong and likely to win or settle, the funding company approves the application.
Funding Amount Determination: The company determines the amount of money to advance to the plaintiff, based on the expected settlement or judgment amount.
Sign an Agreement: The plaintiff and their attorney review and sign a funding agreement. This agreement outlines the terms, including the amount of funding provided and the fee structure.
Attorney Acknowledgement: Often, the attorney needs to acknowledge the agreement, ensuring they will repay the funding company from the settlement proceeds.
5. Fund Disbursement
Receive Funds: Once the agreement is signed, the funding company disburses the funds to the plaintiff. This can often be done in a lump sum and may be delivered via check or wire transfer.
6. Case Resolution
Repayment Upon Settlement: If the plaintiff wins the case or obtains a settlement, the agreed-upon portion of the settlement amount is used to repay the funding company, including any fees or interest.
No Repayment if Case is Lost: If the plaintiff loses the case, they typically do not have to repay the advanced funds, as pre-settlement funding is usually non-recourse, meaning the company cannot pursue the plaintiff for repayment.
7. Attorney Pays the Lender
Deducting and Paying: Once the case is settled, the attorney is responsible for deducting the agreed-upon amount from the settlement and paying it directly to the funding company.
Legal and Ethical Considerations: It’s crucial for the plaintiff and their attorney to discuss and consider the legal and ethical implications of obtaining pre-settlement funding.
Transparency: Ensure that all fees and terms are transparent and understood by all parties involved.
Regulations: Be aware that regulations regarding lawsuit funding may vary by jurisdiction.
It’s essential to note that while pre-settlement funding can provide financial relief during a challenging time, it often comes at a high cost, and considering all options and thoroughly understanding the terms is crucial. Always consult with your attorney before engaging in a pre-settlement funding agreement.