This is the 3rd entry in our series of things you should consider when you client seeks legal finance assistance. This particular installment is crucial to a successful resolution in any case where a client has received legal funding from a lawsuit finance company. This crucial question is:
3. Does the approved or suggested lawsuit funding fit comfortably into the projected value of the case?
There are really two issues involved in this inquiry. The first requires consultation between the lawsuit finance company and the attorney. The size of any legal advance, regardless of the client’s needs or wishes, must, with potential maximum profit, fit comfortably into the projected value of the case. This is an important legal funding underwriting skill. It is what separates superior lawsuit finance companies from mediocre ones. By way of example, if a case has a projected case value of $50,000, a lawsuit cash advance, with projected profit, should not exceed 1/3 of potential case value. Otherwise, the attorney will have a very unhappy client at the end of the case, even though he obtained an excellent verdict or settlement at case conclusion. Thus, in our example, if the legal funding company is recommending an advance with contractual profit that requires a repayment above $16,500, that company is doing the client and the attorney a great disservice.
The second of our two issues is “compromise”. Again, this concept further exemplifies what a superior litigation funding company does for attorneys and clients. In our example, the attorney and the legal funding company representative project a case value of $50,000. What happens when the case, for valid reasons that were not apparent at the time of projection and/or funding, settles for $30,000? The superior legal finance company will adjust its principal and profit return to comfortably fit into the settled value of the case. Thus, in our example, principal and profit should be approximately 1/3 of the case results, or $10,000. If a lawsuit finance company will not promise you, in advance, to adjust rates for compromised, unexpected results, you should seriously consider referring your client to another legal finance company.
Lawsuit Financial Corporation provides non-recourse cash advances to injury victims with pending litigation resulting from Auto Accidents, Medical Malpractice, Premises Liability, Products Liability, Dog Bites, Construction Accidents, Train Crashes, Airplane Crashes and other personal injury litigation. Please look for our fourth installment in our series of things to consider when your client seeks lawsuit funding in our next post.