There are many ways lawsuit funding can improve for consumers and other parties. Several entities are proposing and working on different ways to make it better. However, some of these proposals are too one-sided and are more geared to the party who is proposing it.
Proposals for Lawsuit Funding Change
There are several proposals made in order to protect both the consumers and the legal funders. However, some proposals cannot help but become more in favor of the party who is proposing it. These are some of the examples of the proposals to change legal financing.
• Disclosure agreements. Lawsuit funding companies ensure the disclosure agreements include certain terms and conditions in them. These proposals normally require payment schedules on the first page, a right to cancel the agreement, a rate of return explanation and the attorney’s acknowledgment.
- Most of these proposals are already practiced and considered as the industry’s best practices. They are also usually found in several legal financing agreements. These provisions aid consumers in making informed decisions without giving legal funders too much burden.
- There are no standards on which disclosures are more important. In addition, there are no guidelines on how these disclosures should be conveyed. Different state guidelines can stifle the industry competition as well as increase funding costs.
• Ensuring the plaintiff’s attorney’s acknowledgement. Legal funding is one of the few financial transactions, which has an existing attorney. Arguments indicate that lawyers should acknowledge that they read and explained the agreement to their clients before letting them sign it.
- This proposal helps protect consumers. Funding companies also have interest in ensuring the litigants’ lawyers to acknowledge their lien on the case. This helps them receive their payment in the event of a later debate. Consumers are forced to consider the agreement carefully because of this proposal.
- Most lawyers dislike this proposal. There are those who fear that acknowledgement may be used to drag them into a dispute between the legal funder and their clients. Some just do not like the extra effort and work.
Registration Bonds. A funding company should be required to register with a state agency before it can operate. The registration process is normally lengthy. Companies are also required to pay relevant fees.
- Registration prevents unreliable and less reputable companies from entering the industry legally. This ensures that the best legal funding companies are left to serve the consumers
- Registration can also be a big hindrance to those who want to enter the funding industry legally.
These are some of the proposals for the changes and improvement of legal financing . More proposals are included in the second part of this article.
.:About the author:.
James Sheridan is the Contracts Manager at Pegasus Legal Funding LLC and is responsible for the final stage of the funding approval process. James focus and priority is delivering to PLF’s clients the funds they need as quickly as possible