Non-recourse Loan

Written by Patricia Tunstall
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Non-Recourse Loan Provided by Funding Group

A non-recourse loan is the type of legal funding offered by groups that invest in sound claims that need lawsuit money to proceed. Although legally the funds are not a loan, which must be repaid, they are proffered on a non-recourse basis. What this means for an insolvent plaintiff is that the advance need not be paid back, regardless of the outcome of the lawsuit.

When a funding group is contacted by a plaintiff, all case materials are assembled as quickly as possible so the group members can examine the case. There are no fees attached to any of this process. After all, it would hardly make sense to charge an already-penniless plaintiff for a review of materials before any new funds are forthcoming to pay for it.

Fast Process

The process followed by funding groups is swift, but not hasty. They must make sure that the case has legal merit and that it is a good investment for a non-recourse loan because they believe it will succeed in court. The group makes no background check of credit or employment, and, of course, all aspects of the case material and any personal information is confidential.

When all pertinent material is available for their examination, the group gives an answer regarding a non-recourse loan within 48 hours. If approved for funding, a financial agreement is faxed to the attorney for attorney/plaintiff inspection. When the agreement is signed and returned to the group, a check is sent by FedEx the following day. If the plaintiff wins in court, the fees agreed upon in the financial contract are paid to the group out of the proceeds. If the plaintiff loses, nothing is owed to the group, as they took the risk as an investment.


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