What is Legal Funding? Can My Lawyer Give Me a Loan?
Louisville Injury Lawyer Brian Dettman's Guide to Commonly Asked Legal Funding Questions
Legal Funding QuestionsPersons involved in an injury case sometimes have a need for money before their case resolves. If an injured party is unable to pay their rent, mortgage, utilities, etc there are funders who will provide money before the case resolves. The money is usually contingent upon a successful resolution of the case meaning if you don't win your case you do not pay back the funding company. Here are some common questions and answers to funding, loan, and pre-settlement questions.
You Are My Lawyer Can You Give Me a Loan?A lawyer is prohibited from loaning money to his or her clients. The Bar Association can hand down severe penalties on a lawyer for loaning money (including potential disbarment). The reason for this is simple, if a lawyer were to fund a client that lawyer would potentially have a conflict of interest that would prohibit the lawyer from ethically pursuing a case. If your lawyer has given you a loan they have broken their ethical duties and are subject to severe punishment.
How Else Can I Get a Funding?Pre-settlement funding is sometimes available through a loan company/funder. In order to get funding and injured party must contact a funder and see if they are an eligible loan candidate. The funder will then ask you questions about the facts and strength of the case. Keep in mind that anything you tell a funder is potentially discoverable by the defense/insurance company in your case. This means they can potentially use information you relay to a loan company against you. The funder will then contact your lawyer and ask questions regarding the case. The funder has an interest in being paid back so they take great care to ensure the case will resolve positively. This generally means that you are not eligible for a loan if you are:
-not really hurt
-have a significant delay in treatment
-have a child support lien
-didn't seek medical treatment
-don't have your own insurance (first party coverage)
-the other side doesn't have insurance (third party coverage)
-the other side is disputing liability and there is a slim likelihood of success.
Can My Lawyer Tell The Funding Company to Give Me a Loan?Your lawyer cannot tell the funding company to give you funds. The law firm is a wholly separate business than the law firm. It would be the same as a realtor telling the bank to provide a mortgage. The mortgage company doesn't have to listen to the realtor as it is the mortgage companies' money on the line. Same thing for a legal funder.
Who Should I Contact to Get Funding?You can ask your lawyer for recommendations, use the internet/phonebook, or ask friends. You will likely want to make sure you are getting a good funding rate as pre-settlement funding does not come cheap. You need to make sure you are prepared to pay back significantly more than the original funding amount.