Legal funding has gained widespread popularity as a means of supporting plaintiffs through the often lengthy and expensive process of litigation. Despite its benefits, there are several myths and misconceptions surrounding the practice that can lead to confusion or hesitation among potential users.
Here are 5 common myths about legal funding–debunked.
Myth: Legal Funding Is a Loan That Must Be Paid Back with Interest
One of the most pervasive myths about legal funding is that it’s essentially a loan that must be repaid with interest. In reality, legal funding is a non-recourse cash advance, not a traditional loan. This means that plaintiffs are not required to pay back the funding if they lose their case. The repayment is contingent on the outcome of the lawsuit, with the legal funding company being reimbursed only if the plaintiff wins or settles the case.
If the case is unsuccessful, the plaintiff owes nothing. This key distinction sets legal funding apart from loans, where repayment is expected regardless of the outcome. The risk is entirely assumed by the funding company, providing plaintiffs with peace of mind and financial support during the litigation process.
Myth: Legal Funding Is Only for Personal Injury Cases
Many people assume that legal funding is only available to plaintiffs involved in personal injury cases. While personal injury claims are among the most common types of cases that receive legal funding, it is not limited to this area of law. Legal funding can be used in a variety of cases, including class actions, commercial litigation, employment disputes, product liability, and medical malpractice.
Essentially, any case where the plaintiff is awaiting a settlement or judgment and may need financial assistance to cover living expenses, medical bills, or legal fees can benefit from legal funding. Legal funding companies evaluate each case individually, assessing its merit and the likelihood of a successful outcome, regardless of the specific legal issue.
Myth: Legal Funding Is Too Expensive and Has Excessive Fees
Another common myth about legal funding is that it comes with exorbitant fees that make it an unattractive option. While it’s true that legal funding companies charge fees for their services, these fees are generally proportional to the risk they assume. Unlike traditional loans, which have fixed interest rates, the fees for legal funding are contingent on the success of the case.
If a plaintiff wins or settles the case, the funding company typically takes a percentage of the settlement amount. While the percentage can vary, it is usually negotiated before the funding is provided, ensuring that the plaintiff understands the cost upfront. Many plaintiffs find that the potential benefits of legal funding—namely, the ability to afford legal representation and cover essential expenses—outweigh the costs, especially when considering the high stakes of a lawsuit.
Myth: You Need a Good Credit Score to Qualify for Legal Funding
Unlike traditional loans or lines of credit, which require a good credit score and a financial history to qualify, legal funding does not consider the plaintiff’s credit score. The primary factor that determines eligibility for legal funding is the strength of the case itself. Legal funding companies assess the potential value of the lawsuit, the likelihood of success, and the reputation of the law firm representing the plaintiff.
Because legal funding is based on the merits of the case rather than the plaintiff’s financial situation, it offers an option for individuals who may not have access to traditional forms of credit. This is especially valuable for plaintiffs who are experiencing financial hardship due to the ongoing costs of litigation.
Myth: Legal Funding Delays the Legal Process or Interferes with the Case
Some people believe that obtaining legal funding could delay the legal process or interfere with the strategy of the case. However, legal funding typically does not interfere with the plaintiff’s ability to pursue their case or affect the attorney-client relationship. In fact, legal funding can often help accelerate the process by relieving plaintiffs of financial burdens that might otherwise force them to settle prematurely or discontinue their case.
By providing financial support, legal funding allows plaintiffs to focus on their case, enabling them to hire the best legal representation, cover necessary expenses, and continue pursuing justice without the pressure of financial strain. The funding company’s role is simply to provide the financial resources, leaving the plaintiff’s attorney to manage the legal strategy and decision-making.
Legal Funding From Cash Now Funding Group
Are you or a family member in need of financial assistance due to a lengthy legal battle? Are you preparing for a long-term legal battle to get the compensation you deserve? Cash Now Funding Group can be the financial lifeline you need while your case settles. Applying is free and confidential & no credit check is required.
