Lawsuit Funding - Information and Options

People who are involved in litigation often find themselves short of money.

  • People who are injured may be unable to work or have reduced income due to the injuries they suffered in an accident
  • Sometimes it is necessary to seek additional funding to cover the cost of litigation.

Sources of Funding

The concept of lawsuit funding includes two possible sources of revenue:

  1. A traditional loan, secured perhaps by traditional collateral or a lien on any lawsuit proceeds, with set terms and a contractually defined rate of interest.

  2. Venture capital funding, through which a lending company advances money secured by any eventual verdict or settlement.

The second form of lawsuit funding is typically non-recourse funding, meaning that you only pay back the advanced funds if you eventually recover money for your case. Although there is some level of security in knowing that you won't have to repay the money if you do not succeed in your case, and will not have to repay more than you recover if the advance is greater than your eventual recovery, non-recourse lawsuit funding carries significant fees.

Lawsuit Funding Options

We offer four articles that may help you understand your lawsuit funding options.

  • Pre-Settlement Lawsuit Funding in Personal Injury Cases: What are the legal and ethical issues associated with lawsuit funding, particularly non-recourse advances against the proceeds of a lawsuit, and when should non-recourse funding be considered by a plaintiff in an injury lawsuit.

  • Litigation Funding Options: Non-recourse advances are not the only option available to an injured person in need of money. This article describes possible alternative sources of lawsuit funding, and factors to consider when selecting a source of funds.

  • The Lawsuit Loan: Information about the type of advance of funds often described as a lawsuit loan, how this type of funding differs from a traditional loan, and giving tips on finding the best possible deal if you choose to pursue this type of lawsuit funding.

  • Questions for your Lawsuit Financing Company: Issues that should be of concern in obtaining any sort of lawsuit funding, and questions to ask your financing company that may help maximize the amount of any loan or advance while minimizing any associated costs and fees.

Make an Informed Choice

Choices about lawsuit funding solutions should be taken with great care, and you should consider all potential sources of funding before making your choice.

If you decide to pursue a loan or advance through a lawsuit funding company, be sure to consult several companies so you can obtain funds while paying the lowest possible fees. Your lawyer should help you review your options.

Copyright © 2005 Aaron Larson, All rights reserved. No portion of this article may be reproduced without the express written permission of the copyright holder. If you use a quotation, excerpt or paraphrase of this article, except as otherwise authorized in writing by the author of the article you must cite this article as a source for your work and include a link back to the original article from any online materials that incorporate or are derived from the content of this article.

This article was last reviewed or amended on Apr 26, 2018.