Lawsuit Settlement Funding

Lawsuit Settlement Funding as an Investment

Lawsuit settlement funding is viewed as an investment opportunity by litigation financing groups. They are in the business of providing funds to plaintiffs who are about to drop their lawsuit simply because of a lack of money to proceed. This is a perfect meshing of need and self-interest--the need of the insolvent plaintiff and the self-interest of the group to do all they can to ensure that they invest in winning lawsuits.

If a person has a good case, but lacks the money to see it through to conclusion, these funding groups would consider all the case material before coming to a decision about its legal worthiness. Viewed strictly as an investment, the case must stand up to the scrutiny of the experts who determine its promise for a good return--a win. By financing a cross-section of cases, these business people diversify their legal portfolio just as stockbrokers diversify their client's financial portfolio.

Non-Recourse Advance

Lawsuit settlement funding enables a poor plaintiff to continue the case to settlement or judgment. The interim funding group buys a specified portion of any future settlement or judgment in exchange for a fixed money advance to the plaintiff. If the plaintiff wins the case, the group receives the amount set out in the financial agreement from the settlement proceeds.

If the plaintiff loses, nothing is owed to the group. This non-recourse advance to the plaintiff, if any is left, belongs to the plaintiff, and there is no further obligation to repay any amount to the lawsuit settlement funding group. The risk the group members took was considered a good one, or they would not have decided to offer any funds to the plaintiff. As attorneys, they certainly are aware that there are no guarantees in a lawsuit.