In most cases, attorneys pursue personal injury lawsuits on a contingent fee basis. This means that you are not charged legal fees until and unless your attorney wins your case and you are awarded recovery through either settlement or verdict. Your attorney’s fee is then a percentage of the funds you receive in the case.
However, there are circumstances in which a plaintiff (the person suing) may need lawsuit funding:
- Plaintiffs who cannot find lawyers willing to work their case on a contingent fee basis
- Plaintiffs who cannot meet their personal expenses while they await the results of their cases.
The latter situation is common, as the plaintiff may have higher expenses than normal due to injury, or his or her income may have been compromised by injury. In these instances, you may have other funding options through lawsuit funding.
What is Lawsuit Funding?
If you need money during the litigation of your personal injury lawsuit, your available options include –
Pre-Settlement Lawsuit Loans
Many companies provide litigation funding that is often called a lawsuit loan or pre-settlement loan, designed to provide you with enough money until your case resolves successfully. Rather than making you responsible to repay the loan if you lose the suit and get no compensation, or get a small settlement, these advances are usually structured such that you:
- Are not responsible to pay more than your share of the lawsuit settlement
- Are not required to pay anything if your case is dismissed or a jury finds for the defendant you don’t have to repay anything
That’s the good news. The bad news is that these loans are not cheap. The funding company covers its risks by charging high fees for the service. Talk with your lawyer, as it may have recommendations on more reasonable pre-settlement loan companies.
Personal Bank Loans
If you have decent credit, many lenders offer personal loans at a reasonable interest rate for those facing personal injury and working through a lawsuit. The risk of taking out a personal loan is that you are responsible to repay it whether or not you win your case, and whether or not the compensation is large enough to cover your loan.
Loans from Family or Friends
In a valid, non-frivolous personal injury lawsuit, you probably have good friends and relatives who are sympathetic to your situation and may be open to helping you out during the common financial crisis associated with a personal injury. And if they agree with your attorney that you have a valid case to assign fault against a person or company, your loved ones may be more than ready to assist you, banking on the expectation that you will win the case and can, therefore, reimburse them after you receive your personal injury settlement.