Are Lawsuit Loans Always a Good Idea?

Lawsuit loans are loans that are made to you when you have a case that is pending in court and is likely to settle for a certain monetary amount or be given a jury award. On the surface, they sound like they have significant advantages and no disadvantages. Let’s take a look at the specifics:

You’ve got a lawsuit pending as the plaintiff, and it’s likely to settle for a monetary amount or be awarded damages by a jury. However, it can take significant time for the case to wend its way through the court so that you get to the point where you actually see any money. Because of that, companies have made it possible for you to take out lawsuit loans. These loans are made based on the expected settlement or jury award amount once your case resolves; the size of the lawsuit loan is usually about 10% of what you are expected to receive in your settlement or award. This can give you money to tide you over while the case continues to process, so that you can take care of medical bills, expenses, and other needs.

You pay back the money with fees if you win, but nothing if you lose

What is good about lawsuit loans is that if you happen not to win your case, you don’t owe the company in question any money. They simply take that loss. However, if you win, they will reclaim their loan amount plus fees and expenses. This is how settlement funding companies make their money.

Your lawyer will have to sign off on the lawsuit loans; you won’t be able to qualify for them without your lawyer’s permission.  However, most attorneys have no qualms about pursuing a loan if he or she feels that the case is strong and viable.

You’ll never qualify for lawsuit loans with a frivolous lawsuit. Your case must have merit, and to that end, your lawyer must have taken it on contingency in order for you to qualify for lawsuit loans.

If your lawyer has taken your case on contingency, this shows the lawsuit loan company that it is indeed a valid case and is likely to win either settlement or jury award as a result. Because your lawyer has taken the case on contingency (and therefore won’t collect any monies if you lose, but only if you win), this demonstrates to the litigation financing company that your case is likely to win, so that they won’t lose out on fees and expenses.

If you have a strong, serious case chances are that you will qualify for litigation financing.