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What is Plaintiff Funding?

Felicia Dye
Felicia Dye

Plaintiff funding, sometimes referred to as pre-settlement funding, provides financial services to people with pending lawsuits. These types of services are generally marketed toward victims in personal injury cases. Utilizing this type of service provides the victims with access to money to cover expenses until their cases are settled. When the injured parties successfully receive their settlements, a portion is paid to the plaintiff funding company.

When people are injured in accidents, they often find themselves in a bind. Most adults have financial responsibilities, which are not likely to be placed on hold for the duration of a lengthy personal injury lawsuit. Furthermore, it is likely that these individuals will accrue further debts and expenses for items such as health care, therapy, and prescriptions. When an individual is unable to work, it is likely she may be unable to pay all of the required expenses. This situation may not only be mentally and emotionally taxing but it can also cause long-term financial trauma.

Businessman with a briefcase
Businessman with a briefcase

There are several other adverse results that can occur from such a situation. Some people, for example, exhaust all of their savings and retirement assets trying to survive. When people are stressed about the financial difficulty that is often experienced by those with pending lawsuits, they may make rash decisions, such as settling for less than they should. Plaintiff funding is designed to provide these individuals with relief and to provide adequate opportunity for lawsuits to be handled more to the benefit of injured parties.

To obtain plaintiff funding, a person generally fills out an application. This will provide information about her, her pending case, and her legal representation. She will also usually be required to sign a disclosure agreement. This will entitle the pre-settlement funding company to obtain information from her attorney so a determination can be made about likely settlements and advance funding.

If a person is approved for the service, cash advances are made and she can use the money to pay necessary expenses. Before people sign up for plaintiff funding, however, they should understand that providers of such services are businesses which are not usually affiliated with any legal representatives the victim has hired. They do not usually influence the outcome of a case.

The objective of a pre-settlement funding company is to help an individual so it can make a profit. If a person accepts monetary advances from such a service, when she receives her settlement, the plaintiff funding provider will be entitled to a portion. The terms under which these arrangements exist generally state that if an individual does not receive a settlement, then she owes nothing.

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