Pre-settlement lawsuit funding or the lawsuit loan is one and the same thing. Actually, lawsuit loan is generally used with the reference to Pre-settlement lawsuit funding which is not a loan in real terms. It is a kind of advance fee, investment or a venture capital that is usually under the jurisdiction of individual lawyer or law firms.
Pre-settlement lawsuit refers to a cash advance given to the injured person in return of a promise to repay the amount after the court settlement or victory in the court. Being a re-course funding an injured person may not pay the advance for the reason of loosing in the court or in case of unsettlement. He has to pay his share of payment, which is generally lower than anticipated.
As it involves high risk in the re-course procedure, the fees for the lawyer tend to be higher as compared to other settlements. Hence lawsuit loan is not actually a loan; rather it may term as an advance that is to be repaid after success in settlement in court.
To achieve a law suit funding a person might contact companies that offers pre-settlement funding. It may be done at a suggestion of attorney. Before providing the funds, the company generally contacts the lawyer to get full information about the case.
Accordingly that company estimates the value of the eventual settlement and offers a suitable cash advance to the person. This fee is then returned after the defendant looses in court or the claims are settled to the finance company.
The question that generally arises in your minds must be "Can I Lend Money From My Lawyer?" The answer to this question is a simple 'No'. The reason for this 'No' has a direct equation with the lawyer-client relationship. It is obvious that if a lawyer has interest with its client and any kind of combat between them may lead to worsen situations for the client.
It may not be in the best interest for the client. However, a lawyer can advance the cost of litigation but the money cannot be lended from the lawyer. In this case, a lawyer may refer his client to a lender or a lawsuit company, which, in turn, may pay expenses during the proceedings of the lawsuit.
The advantage of lawsuit loan lies in its minimized risk for the loan taker. The repayments are only made after the lawsuits settle or the success is achieved. The lawyer too has a work motivation due to better return prospect in terms of his fees and the terms and conditions for the success of the lawsuit.
Even if the lawsuit settles for the amount less than the loan, there is no repayment that is to me made. Along with that the cost of lawsuit loan is considerable as they are structured to device usury laws.
The sources of lawsuit financing may be individuals or lawsuit companies. If a plaintiff (a person who brings charge against another person in the law court) is not willing to have a re-course lawsuit funding, he may apply for other loans. Increased amount of fees to the lawyer may act as the reason for non-application of re-course funding by the plaintiff.
The application of other loans may include raising personal loan or equity loan. A loan, which is raised by mortgaging real estate, refers to equity loans. Hence, a person may keep his property on mortgage to raise the lawsuit funds. In some cases, the credit card companies or litigation companies prove to be a cheaper and hence better option for financing this lawsuit finance.
Despite of more cost involved some people do not have other choice than to raise a lawsuit loan. There may be several reasons like absence of other reliable source of capital, or the financial soundness of the client so as to pay medical bills, obtain health care, and pay rent and mortgages and so on.