How to Know If Lawsuit Funding Is The Right Move

Posted about 6 years ago. 2 helpful votes



Are There Dire Circumstances?

If the client is not faced with dire financial circumstances (needs food, shelter, medical care, prescriptions, rehabilitation, transportation, rent payments, saving his/her house from foreclosure, etc.) or has other sources of revenue to tap, the client is not an appropriate candidate. This is, absolutely, a dire need-based program. Legal funding should be considered only as a last resort.


Will Funding Prevent a Client from Settling Early and Cheap?

The best candidate for legal funding services is one that is considering acceptance of an inadequate offer of settlement because of a dire need (outlined in Step 1, above) for funds now. Strategic legal finance will prevent a client from settling a valuable case for pennies on the dollar by providing the cash that the plaintiff needs now and providing the attorney with the precious time needed to resolve the case for full value.


Does the Lawsuit Financial Cash Advance Comfortably Fit Into the Value of the Case?

The size of any legal funding cash advance must fit into case value and leave substantial room for the plaintiff to receive the bulk of his/her settlement proceeds. An appropriate "rule of thumb" is to avoid lawsuit funding that, with maximum profit, would absorb more than 1/3 of the total value of the case funded.


Does the Lawsuit Funding Company Have a "Hands Off" Approach to Funding?

Any company that the client or attorney deals with must have a "hands-off" policy with regard to case management. Case management decisions, i.e., whether to settle and for how much, whether to take certain depostions, whether to go to trial or not, are all decisions to be made by the lawyer and the client and the funding company has no place in this vital decision-making process. All case decisions and legal strategy should be left to the lawyer and client. If the funding company wants to invovle itself in these strategies or decisions, find another company.


Is Lawsuit Financing Contingent Upon Recovery?

Most lawsuit finance programs are non-recourse programs. Return of the legal funding company's principal and company profit should be based solely upon the outcome of the case. If the case fails to recover, the company should be willing to lose its' principal.


Is The Lawsuit Finance Company Willing to Provide, In Advance, a Formula for Its Compensation?

An ethical lawsuit funding company must be willing to provide, in advance, a formula for repayment of its principal and profit. This should include, but not be limited to, the maximum amount that a client may be expected to pay for the legal finance company's services. Further, if the case achieves success, but at a level far below expectations, the ethical legal funding company should be willing to compromise returns to comfortably fit case results. Find out if the litigation funding company is willing, in advance, to commit to a compromise if results are positive but disappointing.


Does the Litigation Funding Company Have Experience and a Strong Record of Client Satisfaction?

The attorney and/or client must inquire into the lawsuit finance company's experience. Is the company a principal or broker? How many years has it been in business? What is its' principal's backround? Have past clients been satisfied? Is it willing to provide references or testimonials? An experienced lawsuit funding professional is a very important tool in a ltigator's arsenal of tools needed to achieve appropriate justice for his/her client.

Additional Resources

For additional information or to apply for a legal cash advance call Lawsuit Financial, toll free, at 1-877-377-SUIT (7848) or visit on the world wide web. You can also find out more about lawsuit funding by reading our blog at With attorney cooperation, lawsuit funding from Lawsuit Financial can often be provided within 24-48 hours after the application. Please call 1-877-377-SUIT to discuss your litigation funding situation.

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