Legal Funding: A True Contingency


In the real time practice, the process of legal funding is really a true contingency. Most of the funding companies they report traditional loans rates over the default rates, it mainly due to the fact that, there are quite number of variables that are related to investing of funds in the litigation. Below are described with some of the reasons regarding why the concept of legal funding is quite far from certainty:


  1. Most of the litigant seeks towards legal funding immediately after the accident. Obviously investigating the accident case at the early stages of the accident is far better than at the later stages
  2. The case value is completely based on the injuries from which the victim is sustained. The legal funding companies they run the risk of investigation of the case mainly on the injuries caused by defendant that have been caused before to the accident and not by defendant itself
  3. The legal funders don’t typically have control over the case. The litigants can decide to settle the matter with small amount or may drop the claims due to different reasons. This is quite similar to that of the minority shareholder in any sort of small business. Minority shareholders is just like position that majority of the investors likes juts because of lack of control
  4. The legal funding companies are not the first to always get payment for a successful case. There are number of such cases wherein the litigant has senior claim holders along with them, they might be included in bankruptcy, and they might have child supports. The attorney fees has to be paid first prior to other costs
  5. In the same manner, a litigant who received legal funding may win the case but it doesn’t mean that they are not at all going to collect. It’s mainly because most of the litigation is based on the judgment proof which means that the litigant can’t collect their judgment which is due to the fact that litigant is bankrupt


Obviously, the legal funding process is considered to be very risky rather than other traditional money lenders. Fighting for legal claim is considered to make sense only the litigant party thinks that there are every chances of winning. The defendant’s invest their real money in thinking that the contingency is of real.It also means that, if there was not at all any risk involved in litigant losing, then the defendant’s would have never wasted their time on the legal fees of the attorneys or else they would have simply settled the case as fast as possible.


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About the author
Author:Mike Smith