Understanding the Costs of Advanced Litigation FundingJuly 23, 2013
The best part of advanced litigation funding is that claimants pay nothing if they don’t recover in their lawsuits. However, there are a few costs associated with a settlement advance.
First of all, pre-settlement funding is not a loan. Monthly payments are not required and USClaims does not expect payment until the case settles. The decision to provide funding is not based on the claimant’s credit. It’s based on the likelihood of recovering in the case. If the plaintiff does recover, the settlement advance is paid back to the advanced litigation funding company out of the settlement, plus the fees associated with the advance.
What are the Fees Associated with Litigation Funding?
Litigation funding fees vary on a case-by-case basis. If the case is expected to settle relatively quickly, the fee is lower than a case that may drag on for years. Most advanced litigation funding companies base their fees on when they expect to be paid, and the longer it takes to get paid, the higher the fee needs to be.
The fee associated with litigation funding is also influenced by the quality of service being provided to the attorney and client, the risk involved in providing the advance, the funding’s capital costs, and marketing and operating costs.
These fees may be more than a bank would charge on a loan. However, because a settlement advance isn’t a loan, and because the litigation funding company takes on a bigger risk that they would not be repaid, the percentage needs to be higher than a bank loan. Comparing the two is uneven because the two transactions are so different.
All fees should be spelled out in the purchase agreement that will be signed by all parties prior to any cash distribution. The purchase agreement should detail fees and repayment, with repayment of the advance not occurring until the case is settled, if at all.
Typically, the fees associated with a settlement advance from USClaims are a percentage of the advance itself. Because we purchase an interest in the settlement, we are paid for that interest once the case concludes, assuming it concludes in the plaintiff’s favor. This amount comes directly out of the settlement; the plaintiff does not need to worry about writing a check.
There are no out of pocket upfront fees to receive a settlement advance, either. Applying should be fast, easy, and free, with an underwriter reviewing the claim and, if approved, being able to provide the cash to the plaintiff within 48 hours.
What are the Benefits of Advanced Litigation Funding?
The intangible benefits of receiving advanced litigation funding are too numerous to list. The main benefit is peace of mind for the claimant, who is able to meet financial obligations such as:
- Pay mortgage or rent;
- Pay off medical bills;
- Make tuition payments;
- And day-to-day expenses like groceries.
Because the claimant is able to pay bills, the attorney is able to advocate for the claimant’s interests, rather than being forced to accept a lowball settlement. And the advantage of using USClaims for settlement advances is clear: because we are a large settlement funding company, we’re able to offer some of the lowest rates in the industry. We have the expertise and knowledge to properly assess the risks involved, thereby bearing less of a risk for ourselves and keeping costs down for our customers.
At USClaims, we offer pre-settlement funding, if a case is qualified for pre-settlement funding then we would purchase a portion of the proceeds of the anticipated court judgment or settlement for some cash now. USClaims only gets paid if a case is won or has reached a settlement! Apply now or call us today at 1-877-USCLAIMS to learn more.