Is Litigation Funding for You?

If you have a pending lawsuit and are short on cash, litigation funding might be the answer for you. Litigation funding is growing rapidly. It provides funding to plaintiffs — before settlements or judgments have resolved the case — with the expectation that the plaintiffs ultimately receive money from their lawsuits. This provides plaintiffs with immediate access to money so that they can cover their medical expenses and household bills while in litigation.

Litigation funding companies don’t require employment verification or credit checks. They base funding solely on their assessment of the strength of the plaintiffs’ cases. Plaintiffs only pay the money back if they receive settlement money or an award from their lawsuit. Funding is usually paid back with interest.

One benefit of litigation funding is that it levels the playing field for smaller litigants so they can afford to wait out a settlement rather than jumping at the first small offer. However, litigation funding is not without controversy. One of the main concerns is that conflicts of interest may develop between the funding companies and the litigants. Their interests may diverge and the concern is that the cases ultimately may not be resolved with the clients’ best interests in mind.

Other questions you may wish to ask your personal injury lawyer:

  • Will more litigation be filed as a result of easy access to money?
  • Will litigation funding encourage adversaries to litigate rather than negotiate?
  • Will litigation funding attract unscrupulous companies who seek to gouge profits at the expense of litigants?

Litigation funding is a growing field, and it is probably here to stay. It raises many questions that only time can answer. Whether it is best for any particular litigant in any particular case is a question best left to litigants and their attorneys.

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