There are many terms commonly used in the legal funding industry and are important for plaintiffs to understand when entering into funding agreements. This week we’re taking a look at underwriting and how it works in the legal funding process.
Underwriting in legal funding involves the evaluation of a lawsuit’s merits, potential outcomes, and associated risks to determine whether to provide financial assistance to the plaintiff or the law firm involved.
Underwriting in legal funding is a comprehensive process that helps funding companies make informed decisions about providing financial assistance while managing their own risk exposure. It involves a careful analysis of the legal, financial, and risk factors associated with the case to determine its viability for funding.
Let’s take a look at how underwriting typically works in legal funding.
Initial Assessment
The process begins with an initial assessment of the basic details of the case, including the legal claims, parties involved, and stage of litigation.
Document Review
The funding company reviews relevant documents provided by the plaintiff or their attorneys, such as the complaint, evidence, legal briefs, expert reports, and any other pertinent information.
Legal Analysis
Legal experts within the funding company analyze the legal issues involved in the case. They assess the strength of the legal arguments, the credibility of witnesses, the applicable laws, and any potential defenses raised by the opposing party.
Evaluation of Damages
The funding company assesses the potential damages that the plaintiff may be entitled to if the case is successful. This includes economic damages (such as medical expenses, lost wages, and property damage) as well as non-economic damages (such as pain and suffering).
Assessment of Liability
The funding company evaluates the strength of the plaintiff’s liability claims against the defendant. This involves analyzing the evidence supporting the plaintiff’s allegations and assessing the likelihood of proving liability at trial.
Risk Assessment
Based on the information gathered during the evaluation process, the funding company assesses the overall risk of providing funding for the case. This includes considering factors such as the likelihood of success, the potential damages sought, the financial stability of the defendant, and any other relevant risk factors.
Financial Analysis
The funding company may also conduct a financial analysis to assess the potential return on investment from funding the case. This involves estimating the amount of funding needed, the expected duration of the litigation, and the potential settlement or verdict amount.
Decision
Based on the underwriting analysis, the funding company decides whether to offer funding to the plaintiff or the law firm. If the case is deemed suitable for funding, the funding company communicates the terms of the offer to the plaintiff or their attorney.
Legal Funding From Cash Now Funding Group
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