Secrets of litigation financing


There are secrets to the financing of litigation that each applicant should know before seeking the financing of the trial. Too many complainants rush to the financing of litigation as the answer to their current cash flow problems without completely understanding the subtleties of litigation financing. This article should put a light on the financing of the complainant’s litigation and the secrets that some dispute financing companies use to make money

What is the financing of the dispute?

The financing of disputes is not a “loan”, but it is rather a funding advance based on the merits of a lawsuit that provides an applicant with sufficient funding to reach the conclusion of the Case when the plaintiff will receive his fair share of colonization or verdict. Litigation financing companies invest in the pursuit as opposed to promoting money to the applicant in the form of a loan. The financing of litigation is not based on the applicant’s prior credit status or bankruptcy. Other terms used for this type of funding include: Loan of Prosecution, Litigation Funding, Loan of Litigation, Prosecution Financing, Prosecution Financing, Cash Advance, Case Loan, The cash advance, the advance of the complainant, the funding of the complainant, the pre-settlement loan, settlement loans, pre-settlement cash advance, etc.

How do litigation financing companies gain money?

All funding companies are different and charge interest and fees differently. We all agree that litigation funding companies take a lot of risk because of their investment in the pursuit, as opposed to investment in the applicant. Investment is therefore also strong as the case. We all know the speed with which a good deal can be launched or a jury can award a large settlement for a case we could call “frivolous”. The United States justice system never ceases to surprise us. In this spirit, investments in litigation financing companies are risky. They must charge relatively high interest rates on the successful cases in order to constitute unsuccessful cases. Some litigation finance companies use a multiplier instead of an interest rate that is really only a different way from the same thing.

Are there other fees associated with the financing of litigation?

Once again, all litigation financing companies are different and will charge interest and fees differently. In general, the answer to this question is “yes”. These fees are generally available on the contract that the applicant’s prosecutor must sign and then drawn from the colony on a successful case. Some examples of these fees include: the origination fees, application fees, documentation fees, closing costs / fees, premature payment penalties, etc. These fees are not so different from traditional loans, but applicants should be aware so that they are not at the coast they see these fees.

Is the dispute a different funding from obtaining my payment?

The financing of litigation should not be a substitute for your payment, but rather a raft that helps you stay afloat while your lawyer fights for you. Too many complainants apply to the financing of litigation with the belief that the financing of litigation is simply a different means of obtaining money from their settlement. Assuming that you earn your case, the amount due to the litigation financing company varies considerably depending on the duration between the date of the advance and the date on which you receive payment / verdict. You must first exhaust the other means of financing first.


As a complainant, you must understand the funding of litigation and the fund security process before applying. If your expectations are appropriately defined and that you do the financing of litigation, you will find that it is a grace of economy in the turbulent world of litigation.