In the past few years, a new financial product has emerged in the market which is called lawsuit funding. It is also referred to as legal funding, lawsuit advance, case funding, pre-settlement funding, etc. These financial products are meant to help the plaintiffs who are waiting for their legal settlements with opposite parties. Although lawsuit funding involves high cost, there are many people who opt for it these days.
At present, the banks and other financial institutions are not lending money to the plaintiffs. This is why new lawsuit funding companies have emerged in the market. These companies provide cash to the needful. One of the best things about lawsuit funding is that the whole transaction is done in the form of an investment rather than a loan. This means that the company gets the money only when the claim or lawsuit is settled successfully. This is the main reason why the whole procedure of lawsuit funding is known as non-recourse cash.
Why lawsuit funding is a high cost product?
The non-recourse nature of lawsuit funding involves lot of cash and high chances of loss, compared to other financial products. Additionally, the processing cost of lawsuit funding is also very high. At present, you will find different interest rates offered by several funding companies. The rate of interest also depends on the size of the transaction to a great extent. The interest rate for lawsuit funding can reach up to 15% per month on the total amount.
Other facts about lawsuit funding
Generally, lawsuit funding is given to the plaintiffs who are involved in commercial disputes or property disputes. In such cases, there are more chances to win and generate profit. The money can also be given as attorney’s fees, expert witness research and expert witness testimony.
Once the case is settled in the favor of the claimant, the lawsuit funding company needs to reclaim the lawsuit money from the plaintiff.