Pegasus Legal Funding stand out from the crowd by offering what others do not. We are proud ALFA members and abide to a strict code of ethics to ensure that our clients are treated justly and fairly. The fact to the matter is that you have plenty of funding companies to choose from and a great majority of them are pretty much straightforward and have a good reputation. Then again, there’s a huge market out there and like any competition, there are those companies that will work for you better, and those that might not be your cup of tea. Just like with everything else in life, there are certain signals that you should look for in order to establish whether the company you’re with at the moment is really what you’re looking for. The following are just some stuff to watch out for, so pay attention .
The absence of a capped rate of return
Truth be told, this one is not the first thing you need to look for, but it’s good to pay attention to it, if everything else seems to be in order. It’s common practice for companies to offer a cap on the amount you’ll be required to pay back in the event that your case stretches longer than you initially thought it would take to resolve it (and this happens quite a lot, mind you). But, you should be aware that certain companies make a habit of investing in some cases very early on, which is why this kind of protection is not something you should expect from them. Therefore, if you find yourself in this situation, the absence of a cap shouldn’t fire your alarm instantly; in fact, a great number of companies who have a pristine reputation intentionally charge lower rates because they have no cap.
The absence of a right to cancel
Keep this in mind – companies that deal in legal funding should allow you a grace period , in which you’re able to cancel the agreement even after you’ve actually received the money. Typically, five business days is what you should expect out of your average grace period. This way, in the event that you find a better solution somewhere else, or you simply change your mind (to which you’re perfectly entitled to), you aren’t hopelessly left with owing a whole lot of money to the legal funding company.
The absence of a disclosure statement or a payment table in the legal funding agreement
There should always be a table displayed by the legal funding company that shows what you’ll owe (in USD) that depends on the time of the lawsuit termination. You should look for a schedule that’s supposed to be broken into intervals of 6 months, which is to say that it should cover a minimum of 36 months. Additionally, all the fees should be included in the schedule, too. The point is that the table should be there to give you precise information about how much you’ll be in debt once the lawsuit is over.
The absence of an explanation of the rates of return
Legal funding companies have different methods when it comes to the calculation of the rate of return that will be charged to you on the amount you’ve been advanced. Some companies use a flat rate of return over a specified period, other companies use a compounding rate of return, and there are also those that use a simple rate of return. Regardless of the specified method, you should always make sure that there is a table that discloses exactly how much you owe at different points in time.
The absence of the requirement of your attorney’s signature on the legal funding agreement
This one is the pies’ de resistance of red flags: make sure that your selected lawyer always gets a copy of the legal funding agreement prior to you actually putting your signature down! Reputable companies will need your lawyer to sign either a receipt or an acknowledgement in different parts of the agreement. If a company doesn’t ask your attorney to be part of the process – run like hell.
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.: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