In the last post, we discussed how an unregulated lawsuit funding market allows for increased flexibility and touched on how that flexibility may be able to help attorneys and their clients in the realm of pre-settlement funding. The post also touched on an approach which, if implemented correctly, allows the attorney to utilize this flexibility to the benefit of those whom he/she represents.
In this post, we discuss the benefits of this strategy and how to implement it.

Lawsuit Funding Scenarios
Most clients will ask their attorneys for money if times are difficult, like when an injury prevents a plaintiff from going back to work. Most state ethics rules prohibit attorneys from advancing money to their clients. So when a client needs money, they apply for lawsuit funding.
The money can be used for all sorts of expenditures: rent, food, utility bills, college tuition, child support, car payments and even surgical procedures can all be financed through the selling of the portion of the future proceeds of a case.
Although clients face the similar financial pressures during their lawsuit, it is equally true that all lawsuits are different, each with its own set of facts and circumstances. This fact poses additional risk for the funding company because the underwriting of this risk is extremely subjective. And this subjectivity means that even though one lawsuit funding enterprise considers a lawsuit “fundable”, another may not.
Indeed, lawsuit funding applicants are turned down every day only to be later approved by another funding outfit for the same case. This uncertainty is a simply one characteristic of a dynamic business model.
Would it not be advantageous for the client to have their attorney minimize this uncertainty while securing the best funding deal possible? Considering the value of an attorney’s time, would it be in the best interest for the attorney to negotiate this deal only ONCE, thus securing the best possible terms with the least amount of time expended?
The Point
What we are talking about here is fostering a relationship with an established lawsuit funding enterprise, one that has the client’s interests in mind because in the lawsuit funding business, attorney satisfaction is an integral part of the business’s growth.
How to foster this relationship?
Creating a working relationship with a lawsuit funding company is as easy as 1-2-3.
- Contact a lawsuit funding company about their programs and make sure you get at least a ball park estimate of the costs associated with the advance. The costs should include items such as process fees, underwriting fees, application fees, and origination fees, if any. Attorneys should ask questions about how the advance is amortized, when the payback is expected and what exactly are the attorney’s obligations under their typical agreement.
- Establish a working relationship wherein you refer clients to the funding company, who in return, pledges prompt and efficient service, as well as complete transparency in how the company works and what is to be expected from all the parties involved. This step will ensure that if and when any concessions must be paid in the interest of settlement, they will be approved in short order. It will also develop a scenario where lawsuit funding will increase the firm’s revenues without the firm having to make any additional expenditures. More on this later.
- Abide by the terms of the agreement if at all possible. If a problem arises, talk straight to your contact at the company. Lawsuit funding is an investment business. Investors are normally more than concerned with the return OF their capital than on a return ON their capital. If a compromise can be made in the best interests of all parties, then negotiate same with transparency and integrity.
If the firm puts forth an honest effort and is able to establish a healthy working relationship with a lawsuit funding company, the rewards will greatly outweigh the time spent in pursuing the connection.
In the next post, we will discuss in detail step one of this list and take the mystery out of lawsuit funding pricing and fees. In later editions, we will discuss the tangible and intangible benefits of having a lawsuit funding company in your firm’s corner. The last four installments of this series can be found here.
Thank you for your interest in the lawsuit funding business.