The legal funding industry is a relatively new industry. Traditionally, personal injury plaintiffs had to rely on savings, loans, or credit cards until they could receive their personal injury settlement. This often made it difficult for personal injury plaintiffs to wait to receive a fair settlement because they were under pressure to get money as soon as possible for bills and other expenses.
Over the past two decades, legal funding has become increasingly popular for personal injury plaintiffs. On the surface, legal funding seems a lot like a traditional loan. However, legal funding is not a loan. Instead, lawsuit funding is a non-recourse cash advance. Personal injury plaintiffs are not required to make any payments until their lawsuit is settled and the money does not have to be repaid if the lawsuit is unsuccessful. Further, legal funding advances are not reported to the credit bureaus, so the plaintiff’s credit score is not affected by obtaining a lawsuit cash advance.
After a personal injury plaintiff receives a cash advance from a legal funding company, the legal funding company has no involvement in the case. The personal injury plaintiffs and their attorneys take the steps and time necessary to obtain a desirable settlement. After a settlement is reached, the plaintiff pays back the cash and with the agreed interest to the funding company. The plaintiffs have no further obligations to the legal funding company and can spend their settlement in any manner they choose.
About the author
Bob Tansey is the Business Operations manager at Pegasus Legal Funding. Bob brings over 10 years of experience in litigation finance and specializes in leveraging technology to streamline the pre-settlement funding process.