Litigation funding is the acquisition of money to pay for legal proceedings, often contingent on the outcome of the case. Loans, personal loans, and other financing options can be used. Contingency fees and other sources of funding may also be available.
The term “litigation” refers to all legal proceedings of a lawsuit. It can be a very expensive process. Litigation funding is the acquisition or use of money necessary to pay for legal proceedings, such as the cost of any attorneys involved in the case. This funding is often contingent on the outcome of the case, which means the fees could be higher if the case is won or lower, or waived entirely, if the case is lost. Various types of loans can be used to finance litigation, and they can also depend on the outcome of the case.
contingency fees
In some cases, such as personal injury claims, a person may retain an attorney on a contingency fee basis. This means that the attorney’s fee is a percentage of the amount awarded, which would mean that there is no fee if no money is awarded in the case. The law firm pays all litigation costs until the case is resolved. Some clients cannot find a lawyer who is willing to do this, or may have a lawyer who will charge additional fees. In this case, litigation funding must be found from another source.
Demand Loans
There are many companies that offer litigation financing options. One type of litigation financing is commonly known as a lawsuit loan. With this type of loan, a person can borrow enough money to pay for a case until its conclusion, when the verdict is announced or a settlement is reached.
This type of loan may offer non-recourse financing. This means that if the jury decides in favor of the borrower or the case is dismissed, he or she is not liable for any charges. The fees associated with this type of litigation funding are high. A person should consult with their attorney and make sure the full amount of fees is understood before signing a contract.
Personal loans
Another option for litigation financing is a personal loan. Someone with good credit could be able to find a low-interest unsecured loan. This can be a good option if the interest rates are not higher than those for judgment loans or other types of financing, such as credit card advances. Other forms of litigation financing may include using the equity in a home or borrowing from family members.
Other financing
Anyone in need of litigation funding should investigate all ways to receive any funding to which they are entitled. For example, for a claim for work-related injuries, a person could qualify for workers’ compensation benefits, including funding for any litigation involved. Funds may also be available through insurance plans or certain types of retirement plans or other investments.
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