Lawsuit Funding Helps Attorneys’ Practices
Lawsuit funding’s original mission was to provide immediate cash relief to plaintiffs who were unable to meet their financial obligations. The business found its true calling in the personal injury realm where injured parties were unable to work as before their accidents. This lack of cash flow often forced these victims to accept “low ball” settlement offers instead of allowing their lawyers to secure just compensation. Yet lawsuit funding helps attorneys as well.
In this post, we explore how lawsuit funding helps attorneys with financial support for their clients but also examine how lawsuit funding can help attorneys grow their practices.
Helping Attorneys with Lawsuit Funding
It is safe to say that lawsuit funding has met its original mission – to help plaintiffs and their lawyers with financial support during the litigation process. Simply viewing the growth of the lawsuit funding industry over the last 15 years is proof the industry fills a legitimate need in the marketplace.
Primarily, lawsuit funding helps plaintiffs with immediate cash to keep expenses current while they wait out the civil legal system. Since most state ethics rules prohibit attorneys from advancing money to clients to meet personal needs, lawsuit funding helps attorneys in several ways.
So how can lawsuit funding help your practice?
The bread and butter of lawsuit funding is funding plaintiffs’ living expenses while they wait for their cases to be resolved. Personal injury clients often find themselves out of work because of their injuries. Lawsuit funding provides monetary relief for plaintiffs while they wait for their case to be litigated. Essentially, lawsuit funding levels the playing field between plaintiffs and insurance companies with the financial wherewithal to prolong litigation.
There is little doubt lawsuit funding has helped millions of plaintiffs over the years and continues today. Yet paying for living expenses is just one way lawsuit funding helps attorneys and their clients.
Although not as common as plaintiff funding, surgical lawsuit funding for surgical treatment make up a large part of very large settlement funding contracts. In many jurisdictions, severely injured plaintiffs have limited medical coverage to adequately treat their injuries leaving them in search of other options to pay for treatment.
One common option is finding medical professionals who will perform services in exchange for the attorney issuing a Letter of Protection (LOP) “protecting” the provider’s fees out of the settlement proceeds.
In many cases, a more cost effective option is to use lawsuit funding to finance the surgery. We contact the provider, negotiate a cash price for the procedure and pay them directly. Often, plaintiffs save tens of thousands of dollars when their attorneys ultimately disburse any recovery.
Thus, lawsuit funding helps attorneys limit medical expenses – which leaves more money for the plaintiffs themselves. It should go without saying that happy clients are good for business. It stands to reason because satisfied customers/clients are more likely to refer future business. This is what many would call a “win-win” scenario – all made possible through the use of lawsuit loans.
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Other Plaintiff Funding Uses
Whenever there is access to cash, savvy individuals will seek to lever that cash to make even more money. Lawsuit funding helps attorneys lever access to funds to increase the value of their cases. This can be accomplished in a myriad of ways. For their clients, lawsuit funding helps attorneys pay for:
- Accident reconstruction experts
- Medical experts
- Legal experts
- Medical services including surgeries
- Filing costs
- Document preparation fees
- and more lawsuit funding uses.
Attorneys Use Lawsuit Funding
Lawyers can also utilize lawsuit funding in the form of portfolio financing. These specialty financing transactions involve plaintiff firms pledging a portion of the future proceeds of their contingency fee agreements in return for a quicker influx of capital than would otherwise be available through traditional sources. Law firm loans are approved based upon the anticipated winning of fees in pending litigation, not the creditworthiness of the applying lawyer or firm.
Portfolio advances are offered to personal injury practices where there is a substantial amount of personal injury clients retained and can be extremely flexible funding options.
For example, many law firm loans are based upon a portfolio of contingency fee retainers but allow partial repayment in the event of unforeseen losses. The partial repayment allows the firm the time to earn more fees and make good on the arrangement.
Practicing law in a competitive marketplace can be difficult. Surplus cash flow can make or break a firm’s marketing efforts. Portfolio advances help attorneys who understand the value of their cases to lever their future fees and drive even more business.
Settlement Funding Is a Tool
Settlement funding has a place in today’s personal injury practice. To learn more about how lawsuit funding helps attorneys, give us a call. We are plaintiff advocates, and are eager to help you and your clients reach your goals.
Thank you for your interest in the settlement funding business.