- October 30, 2017
- Jeffrey A. Rubin
Definition of Accident Funding:
Accident funding is also called accident funding, legal funding & pre settlement funding. Consequently, if a client can’t pay his or her bills they will turn to legal funding for their lawsuit. If a lawyer is short funds he might borrow from a pre settlement funding company. Legal funding companies provide money to those who otherwise can’t get it. It can mean the difference between having a lawsuit or none at all. In particular, it helps those people who do not have access to credit cards or bank loans. If you find the right accident funding company it can mean the difference between settling and settling for less.
Lawsuit funding provides cash to the litigants in exchange for being paid back if successful. However, the repayment includes the principal and interest. When a case proceeds to trial and the borrower loses then third party funding company receives nothing. The funder loses the money that they put into the case. Hence, the money that is advanced is only returned to the accident funding company if the lawsuit is successful either by settlement or by verdict. If the lawsuit is lost, then the client or lawyer owe nothing.
Availability of Pre Settlement Funding:
Accident funding is available in most places in the United States. The most common type of funded cases are personal injury cases or accident cases. However, accident funding companies also fund class action cases, products liability cases, even structured settlements. Also, commercial litigation funding is also a fast booming part of accident funding. Hedge-funds and private-equity groups often fund accident funding companies through lines of credit. This credit is used to fund multi million-dollar lawsuits and class actions. They also fund the smaller advances made to individual plaintiffs who have a financial need that can’t be met during the pendency of the lawsuit. Therefore, this is a multi billion dollar industry.
High Funding Fees:
Especially relevant to the client are the rates at most legal funding companies rates. These rates are advertised as 3 04 4%. Interestingly, that sounds great even to the educated consumer. However, what they don’t reveal up front is that the rates are monthly compounded. Instead of paying a fixed 15% a year, the rate goes up every month based on the previous month. In addition, these companies will charge an application, processing, underwriting, service and other fees for you to borrow. Most companies add the fees to the principal. That means you end up paying back double after a year and a half.
The amount of money that plaintiffs receive through litigation funding varies. However, it is a figure that is 10 to 15% of a conservative estimated value of the net recovery of the plaintiff or client. Some litigation funding companies will fund a client a second or third time. Those cases are where the new advance still fits into their calculation or formula for value of the case.
Why Redwood Funding Group:
Redwood Funding Group is not owned or funded by a hedge fund. It is a family owned business run by former personal injury attorneys, not bankers. Our experience has enabled us to offer the most competitive repayments Unlike our competitors, we never charge any fees in any form. We also never compound our interest in any form. We have one fixed rate of 15% for each six month interval that you have our money.
Other Funding Companies:
Noteworthy is that accident funding companies advertise rates as low as 2 or 3%. Noteworthy, is that these companies don’t mention the fees imposed. Therefore, a smart consumer must read the fine print. That 3% is usually monthly compounded. A fee is added to the principal. The annual cost of this loan is as high as 60 or 70%. The large pre settlement funding companies are Oasis Financial, Peachtree Funding, Global Funding and Momentum Funding. Those interested in legal funding muast compare apples to apples. Call and ask what the bottom line amount owed will be. If they don’t answer your question then they have something to hide. In conclusion, compare us to any other lawsuit funding company and see why we are one of the hottest funders in the country.
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