Legal Funding Blog

We reach out to legal funding experts to bring you the latest news on the legal funding industry.

We are just getting started but our goal over time is to be largest online repository for insights, opinions and articles on legal funding.

The Legal Funding Industry

The legal funding industry is a fast-growth financial services industry that meets an acute need of plaintiffs and their attorneys. Attorneys take cases on a contingency basis, which alleviates the legal cost burden for the plaintiff, but plaintiffs must also cover living expenses. In many cases, plaintiffs are limited in their ability to earn money precisely because of the unfortunate event that led them to have to sue somebody.

Ironically, the injury or event that caused the lawsuit works to the defendant's advantage. Because the plaintiff cannot earn money, they experience intense financial pain. Eviction is commonplace, as is the loss of a car or the inability to get needed medical treatment.

Traditional financing sources are not available to many plaintiffs. Traditional creditors are not able to assess the value of what may be the plaintiff's only financial asset: their lawsuit and its pending settlement.

Plaintiffs are constantly calling their lawyers to say "I need money!" and this is a distraction to the lawyers, preventing them from focusing on the case. Alternatively, the plaintiff may say "Let's settle now!" even when a better settlement could be obtained in the future.

Legal funding comes to the rescue by advancing money to the plaintiff for living expenses. The advance is against the future settlement or judgment and the money is provided on a non-recourse basis. In other words, there is no need to pay back the money if the case is lost or dismissed.

Fees for legal funding are high relative to some other credit alternatives. At the same time, fees for legal funding are low relative to some other funding alternatives. Ultimately, competition and the market will define the appropriate fees for this new industry.

In this legal funding blog, we will be posting and commenting about how the legal funding industry is developing. If you have anything to contribute, we welcome your contributions.