Class action lawsuit funding is a relatively new method of litigation financing, one that has recently come into popular use. For instance, there are several firms that seek to retrieve monies paid out in personal injury lawsuits. Yet other class action lawsuit funding companies assist the clients in finding suitable sources of litigation funding, either directly or refer the customers to appropriate sources of such funding. One challenge to class action lawsuit funding is that many of the attorneys who offer this type of lawsuit funding do not have experience in handling cases that involve this type of settlement. The funding companies have an expert team of attorneys and support staff who are very familiar with these types of cases.
Class Action Lawsuit Funding
The companies utilize a common funding source which is known as an “advance deposit”. This advance deposit is simply an upfront fee paid to the attorney’s office by the plaintiff. The attorneys take a percentage of the money advanced and use it to cover the cost of expenses. It is a common practice for these companies to charge a percentage above and beyond the actual costs to compensate the attorney for his work in class action lawsuit funding.
The main reason behind using settlement loans is the expediency with which the case moves through the court system.
Litigation is expensive because it requires many months of court activity and settlements. Many individuals who file lawsuits find it unaffordable to continue the litigation process in a standard court environment. By turning to a class action lawsuit funding company, individuals can ensure that they receive the settlement they deserve much earlier than normal. With so many people out of work and struggling to make ends meet, lawyers are often forced to take on cases that have a high potential for huge payouts.
The other advantage of class action lawsuit funding is that it allows attorneys to be paid a portion of the money advanced.
This provides an additional source of income for them. In some instances, the individual attorneys earn more than the total amount of money advanced. When this happens, the attorney receives a bonus from the settlement cash advance. This is considered to be a form of “diverting income” and is not considered to be a loan.
The plaintiffs who file these types of lawsuits are usually entitled to a portion of the payouts.
A portion is called “risk-fees”. If the amount of risk-fees is less than the premiums that would be collected on a traditional lawsuit loan, the plaintiff will not receive any interest on the defaulted payments. Thus, class action lawsuit funding allows the plaintiffs to keep their lives and their health as well as their means of livelihood intact by providing them with a regular stream of cash.
Individuals who have been injured in accidents, or whose dependents have been killed, can sometimes be unable to work again.
They may have permanent disability and not have the capacity to earn. Sometimes they may have a minor injury that requires time away from work and a significant expense. Such individuals may need to adjust their lifestyle because of their injuries. Such individuals and their families may qualify for accident settlement funding through a class action lawsuit funding program.