Because lawsuits are costly, many people are unable to seek legal action when wronged. Typical fees surrounding a lawsuit include fees paid to attorneys and court costs. Some lawyers are unwilling to represent individuals who cannot pay for their services upfront. On the other hand, there are a select number of attorneys eager to offer lawsuit financing. This option has gained widespread popularity, and is currently being put into action by many attorneys.
Lawsuit financing varies from attorney-to-attorney. Some attorneys require a small upfront retainer or fee, before agreeing to finance the remaining amount. Yet, other lawyers are more flexible and do not require a retainer. Instead, they agree to accept weekly or monthly payments until fees for their service are paid in full.
Ways to Pay for Lawsuits
Persons seeking legal action against another may finance their lawsuit one of several ways. If not using a lawyer, the only expense incurred involves filing the lawsuit and paying court costs. For this matter, the plaintiff may simply pay litigation fees out-of-pocket. Then again, if a lawyer becomes necessary, there is always the option of obtaining a loan (home equity, personal loan, etc.) or using a credit card for reasonable expenses. On the other hand, if headed toward a long and potentially costly litigation, rather than exhaust your cash savings or max out credit cards, consider lawsuit financing.
How Does Lawsuit Financing Work?
When financing a lawsuit, prospective clients sign a formal agreement or contract, in which they agree to make payments to an attorney for representation in a court case. There are no specific guidelines on lawsuit financing. Rather, attorneys establish stipulations for their own personal firm. Depending on the amount owed, attorneys may extend credit for several weeks or several months. A unique way of obtaining payments is receiving a certain percentage of the proceeds from a lawsuit won. Perhaps you have observed radio or television commercials with lawyers proclaiming, "We get paid when you get paid." In other words, clients are only required to pay for services if the case is won. Of course, before an attorney agrees to take on such a case, he or she will have confidence in their ability to win in court.
Advantages of Lawsuit Financing
Agreeing to finance a lawsuit has certain advantages. For starters, some people have a legitimate reason to sue another person or corporation. However, because of limited resources, many people fail to seek legal action. With lawsuit financing, persons in this situation are able to acquire the help of a good attorney, without going broke. During the consultation, attorney and client will likely discuss how much money to seek for damages. This dollar amount will be slightly increased to include the attorney's fee. If the client wins their court case or a settlement, attorneys acquire their fee from the proceeds. Because payment depends largely on the outcome of the court case, lawyers are more apt to devote a lot of time and energy into preparing and winning the trial.