Litigation financing is the acquisition of money to pay for legal proceedings. Loans, contingency fees, personal loans, and other financing options are available, but fees can be high. Funding may also be available through insurance or retirement plans.
The term “litigation” refers to all legal proceedings of a lawsuit. It can be a very expensive process. Litigation financing is the acquisition or use of money needed to pay for legal proceedings, such as the cost of any lawyers involved in the case. This funding is often conditional on the outcome of the case, meaning that fees could be higher if the case is won or lower – or canceled outright – if the case is lost. Various types of loans can be used to finance litigation and may also depend on the outcome of the case.
Contingency expenses
In some cases, such as personal injury claims, a person may be able to hire an attorney on an emergency fee basis. This means that the attorney’s fees are 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 expenses until the case is decided. Some clients are unable to find an attorney willing to do this, or they may have an attorney charge extra fees. In this case, litigation funding must be found from another source.
Loans for lawsuits
There are many companies that offer litigation financing options. One type of litigation financing is commonly known as a litigation loan. With this type of loan, a person is able to borrow enough money to pay off a case until its conclusion, when the verdict is announced or a settlement is reached.
This type of loan could 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 fees. The fees associated with this type of litigation financing are high. A person should consult their attorney and make sure they understand the full amount of fees before signing a contract.
Personal loans
Another option for litigation financing is a personal loan. Someone who has a good credit history may be able to find a low-interest unsecured loan. This can be a good option if the interest rates aren’t higher than those on lawsuit loans or other types of financing, such as credit card advances. Other forms of litigation financing might include using the equity on a home or borrowing from family members.
Other financing
Anyone in need of litigation funding should research all ways to receive the funding they are entitled to. For example, for a work injury compensation claim, a person might qualify for workers’ compensation benefits, including funding for any litigation involved. Financing may also be available from insurance plans or some types of retirement plans or other investments.
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