Attorney Cooperation in Lawsuit Funding

February 27, 2024 by Paul Coppola

Attorneys Use Lawsuit Funding to Benefit Their Practices

Attorneys use lawsuit funding properly by fostering working relationships with reputable lawsuit lenders. These relationships are a valuable asset for your firm.

Since each lawsuit is unique, attorneys sometimes require flexibility from lawsuit lenders to provide much needed liquidity for clients. These funds can be used for any purpose ranging from surgical procedures to daily living expenses.

In this post, we examine the best way to find the best lawsuit funding company, assure the terms of legal funding contracts are fair and transparent and explore how lawyers can best use lawsuit funding relationships.

Understanding Contract Structure and Costs

Almost all lawsuit funding agreements assign property rights in a portion of the future proceeds of pending litigation. The contracts are drafted in this way so the transactions are “non-recourse” and fall outside the realm of traditional loans for purposes of state usury laws.

According to the contract, the lawsuit cash advance is to be repaid from settlement or judgement proceeds and lenders cannot pursue plaintiffs personally for repayment. Thus, if there is no monetary recovery, the advance is not repaid. While percentages and time are factors which dictate repayment amounts, the contingent nature of a successful outcome makes these transactions unique.

While there is a wide range of lawsuit loan pricing methods used by different lawsuit funding companies, the vast majority of advances on pending lawsuits‘ repayment schedules are calculated in one of two ways.

The first way is through a compounding monthly rate. The normal range is 2.5% to 3.5% per month. The second way is by calculating a simple interest rate based on the contract amount. Clients can expect to see a range from 18% -50% every six-months until the case is settled and advance repaid.

All Rates Are Not Equal

You may be surprised to learn that a compounding monthly rate may not be as oppressive as it sounds. In fact, if a lawsuit were to settle within the first 6 months after an advance, the average compounding monthly rate is cheaper than a flat rate calculation. After that time frame, but before 24 months, both rate structures are remarkably similar. Only after 2 years is the compounding effect noticeable.

There are pros and cons to both lawsuit loan rate structures. And although the contractual language of lawsuit funding transactions is not complex, what personal injury attorney wants to spend the time becoming an expert in this field? As attorneys, we cannot be an expert in everything. Couldn’t your time be better spent elsewhere?

The nuances of lawsuit loan contracts are easily grasped when you have a “go to guy” in the lawsuit funding business. A good working relationship with a funder you can trust will save you a great deal of time in the long run.

If You Have Any Questions, Call 888-964-2224

WE ARE HERE TO HELP YOU!

Understanding How Attorneys Use Lawsuit Funding Properly

Lawsuit funding operations design contracts which protect their interests in the event a dispute arises. Obviously, lawsuit funding companies are concerned with repayment of capital. Intelligent lawsuit funding companies are also concerned with creating mutually beneficial relationships with attorneys and their clients. They understand the value of attorney referral business to the extent that it lowers the cost of lawsuit loan case origination.

Smart plaintiff attorneys use lawsuit funding properly when they understand funders’ business needs and balance them with the needs of their clients. For example, consider a personal injury case where the plaintiff was not forthcoming about prior injuries. Once deposed, plaintiff was forced to admit injuring the same body parts in a prior accident. One can expect any settlement offer to be well below what was projected by lawsuit funding underwriters relying on limited information.

The result might be difficulty in settling the case. After all, the lawsuit loan, if paid off in full, will yield virtually no recovery for the plaintiff personally. Meanwhile, the attorney cannot “sell” a reasonable settlement offer to his client who wants to go to trial to see what happens. Of course, the plaintiff is unaware of the costs associated with going to trial. He/she may have read an article online stating a particular injury type is worth over $1,000,000 in settlement.

Faced with the “throwing good money after bad” prospect of prepping for trial, hiring experts and actually picking a jury, attorneys who have existing relationships with lawsuit funders can approach these companies and explain the situation. Although many would not be pleased, professional funding operations understand the value of repeat business and will usually be reasonable if settlement negotiations break down. Having to take a reduction on a single case is far more palatable when that same firm routinely refers clients for funding.

What are the First Steps?

Contact a lawsuit funder about their programs and make sure you get at least a ballpark estimate of the costs. These should include process fees, underwriting fees, application fees, and origination fees, if any. Attorneys should ask questions about how the advance is amortized, when repayment is expected and what exactly are an attorney’s obligations under a typical agreement.

By beginning a dialogue, you will get a feel for whether the funding company is up front and honest with the information you request and a sense of what it will be like to do business with the company in the future. From there, it is just a matter of getting comfortable with the lawsuit loan process and the players.

Choose Fair Rate Funding

At Fair Rate Funding, we want to be a resource for your firm and your clients. We are plaintiff advocates in that we afford litigants the financial support they need to pursue their interests in the court system. We’ve been doing so since 2007.

If you have any questions of any kind about how lawsuit funding can help your practice, please contact us at 888-964-2224. We are here to help and are at your service.

Thank you for your interest in the lawsuit funding business.

Apply Now

March 3, 2022 by Paul Coppola Leave a Comment

Attorney Approval Not Required, But Strongly Recommended

Lawsuits take time to properly pursue. Many cases take years to settle. Fair Rate Funding can be an ally in the pursuit of justice on your behalf. We often provide better value to our customers when we have a good relationship with your legal counsel. In this post, we discuss whether your attorney needs to approve your lawsuit loan.

Fair Rate Funding has been in business since 2007 and has good relationships with hundreds of law firms throughout the country. We will work with your attorneys from the very beginning to get you the cash you need so you can get the best possible resolution to your case. The proper use of lawsuit funding will be an asset to your case and allow you to refuse low ball settlement offers.

Does your attorney have to participate and approve your taking lawsuit funding on your case? In almost all instances, the answer is yes. Read below to learn more about why lawyers need to approve lawsuit loans.

Initiating the Process: Beginning Your Application

Taking an application is the first step in this process. Fair Rate Funding then sends a request for information to lawyers’ office to gather the necessary documents.

Many clients call in and ask if their attorney needs to be involved. The answer is yes. This is important to a funding company the attorneys are charged with repaying the lawsuit advance once the case is resolved.

After the application is made, it is usually a good idea to contact your attorney and inform him/her of your plans, if you haven’t done so already. Most lawyers do not object to lawsuit loans, yet we still need attorney cooperation to proceed.

If You Have Any Questions, Call 888-964-2224

WE ARE HERE TO HELP YOU!

Attorney Communication and Lawsuit Loan Approvals

To gain an approval for funding, Fair Rate Funding will need to know the facts of your case and supporting documentation. We use this information to determine the likelihood you will be successful in your claim/lawsuit.

Your attorney(s) will likely ask for your consent in providing this information to us. Because there is an attorney-client relationship and lawyers in most jurisdictions have a duty to keep your personal information private, we ask that you give your attorney permission to discuss your case with us and our underwriters.

Be assured we will only use the information to pursue funding on your behalf. We will not divulge any information about you or your case without a court order directing us to do so. Your information will remain confidential under all but the narrowest of circumstances.

Case Evaluation and Underwriting

Your attorney-client relationship is actually a pre-requisite to most forms of lending on lawsuits. Because attorneys are generally paid on a contingency fee basis, they are the first screeners of the viability of your case. This is true because attorneys “invest” time and money into the pursuit of your claim. They want to make sure they will be paid at the end of the efforts. It is simply business and business drives the profession.

Likewise, Fair Rate Funding is a business seeking to make a profit. Our role is also to “invest” in the outcome of the case using money to bridge the gap between your accident/incident and the successful resolution of the claim.

Accordingly, we make our own determination regarding the likely outcome. We do this through underwriting processes and consultation with your counsel. This consultation is essentially communication between your lawyer(s) and our underwriting team either by phone or through email/text. We rely on this communication to assess the value of the case, time it may take to resolve and how confident your lawyer(s) are about the circumstances surrounding your claim.

Factors such as insurance coverage, medical treatment, medical and other experts, and other damages are major determinants not only in whether your case is approved but also the amount we are willing to advance. All or most of this information comes from the underwriting process.

There are no guarantees, but the fact you have an attorney spending time and money on YOUR case – at the very least – interests us as investors. When you are approved, you will know that in addition to your attorney, Fair Rate Funding has confidence in your case.

Having Your Back

Our return is based upon a successful recovery. However, we are not involved in the pursuit of your claim. Decisions that may affect the outcome of your case are made by you and your attorney. We will not make any decisions about how your case is handled nor will we try to influence you or your attorney on any matter regarding your clam.

Lawsuit loans can help your case in certain areas – namely providing financial backing necessary to pursue the matter as you see fit. It cannot get involved in the matter itself nor any of the decisions which need to be made. Those are left to you and your legal team.

Lawsuit Loan Lenders Work Directly with Your Lawyer Post Settlement

Once your case is successfully resolved, most likely a check will be deposited into your attorney’s trust account. Your attorney then is tasked with making sure all parties which are entitled to a part of the proceeds are paid. These amounts include lawsuit funding but also might include any of the following:

Expert fees
Medical records
Filing costs
Attorney’s fees
Court reporters
Medical liens
And a host of others.

When your lawyer signs our funding agreement, they promise they will repay our advance according to the terms of our agreement with you. You will not have to worry about repayment in almost all instances. When you receive your check, that money is usually unburdened by other claims, including ours.

And If My Attorney Won’t Cooperate?

Lawsuit loans have become a part of legal landscape and as such, most attorneys understand the need and benefit of these agreements. However, some attorneys still prefer not to work with lawsuit funding companies.

If a lawyer refuses to participate, we simply cannot offer you legal funding. As stated before, lawsuit funding is contingent upon your attorney’s cooperation and promise to repay. Fortunately, these situations are becoming more and more rare.

Remaining financing options can include finding an attorney who will participate, or you could also explore other, more traditional options such as personal loans or credit card advances. You should be aware some of these may be secured by collateral and likely must be repaid even if you lose your case.

Apply with Us for Lawsuit Funding Today

If you need cash now to pay for medical bills, living expenses or anything else, we can help you. Apply today by filling out the form on this website or by calling 888-964-2224. We are ready and willing to get you started immediately and are here to help.

We’ve been in business since 2007 and have provided tens of millions of dollars to our clients. You can be one of them. Use our resources so you can refuse low-ball settlement offers made by insurance companies and their clients. Call today. We can help.

Apply Now

June 5, 2018 by PMCESQ

Attorney Cooperation in Lawsuit Funding Helps the Process

When a plaintiff obtains a lawsuit cash advance, otherwise known as pre-settlement funding, case loan companies require the signature of the attorney to finalize the transaction. Attorney cooperation in the lawsuit funding process is the single most important factor in obtaining cash now for your case. Below is a list of important reasons why legal finance companies require attorney cooperation in lawsuit funding.

Speed

The name of the game in lawsuit funding is speed. Clients are often at the end of their financial rope when they decide to pursue a lawsuit loan against their case. The best service is the fastest service. And the best way to achieve this aim is to gain the confidence and cooperation of the attorney’s office and staff.

99% lawsuit loan delays are due to chasing the proper paperwork. This can be remedied with clear communication of exactly what paperwork is needed and why.

Of course, attorneys and their staff are very busy people and are not always going to drop everything they are doing to facilitate a lawsuit loan. Often support staff has to rifle through voluminous files searching for relevant documents. Through cooperation however, documents are obtained as soon as possible and the lawsuit loan process runs much smoother.

Attorney Cooperation in Lawsuit Funding

Lawsuit funding companies are in the business of advancing money for profit. The real trick is not sending the money out, but getting it back in.

Normally, when the lawsuit settles, the defendant (or the insurance carrier) issues a check to the plaintiff which is deposited into the attorney’s trust account. From there, the attorney disburses the funds to his own firm, the client and any liens which are outstanding. A lawsuit loan is such a lien. Because the attorney ultimately must repay the cash advance to the lawsuit funding company, it is generally a good idea to have a cooperative relationship with that lawyer and staff.

Fraud

Unfortunately, we occasionally encounter persons operating from a scarcity mindset who, in an effort to ease their own pain, offer inaccurate information to lawsuit funding outfits. The vast majority of this misinformation is flushed out by various mechanisms, however, the essence of the problem still remains. Certainly, lawsuit funding collection efforts would be greatly affected if the investment and return had to be retrieved from the clients themselves. Instead, funding contracts require the proceeds from any settlement or award first be deposited into the attorney’s trust account and then disbursed to the interested parties. This requirement is implemented industry wide, with few exceptions.

Attorneys spend a large part of their practice following rules. They are in a privileged position to offer advice to clients and are also regulated by professional conduct standards. Rarely would an attorney knowingly stick his neck out for a client whose intentions are less than honorable. The attorney simply has nothing to gain from holding back payment on a lawsuit funding repayment. Knowing this, lawsuit funding companies trust attorneys to honor the obligations of their clients. The result is a successful exchange in value from all involved.

Attorney Cooperation in Lawsuit Funding Solves the Problems

A lawsuit loan is an above board transaction. For the reasons set forth above, and others, attorney cooperation in lawsuit funding helps keep it that way.

Thank you for your interest in the lawsuit funding business.

Apply Now