The Legal Funding Parties
- November 30, 2017
- Jeffrey A. Rubin
Introducing the Accident Funding Players:
Typically, when one thinks of legal funding we really only think about a person getting an advance from a company. It is a little more complicated then that. For a accident funding agreement to work one must think of those involved as a triad and sometime a four legged chair. The four key players in a basic accident funding agreement are the client, the funder, a broker and the attorney. A broker, however, is not always a part of the litigation finance agreement. The legal funding parties are therefore somewhat flexible. Choosing the right parties in an agreement can make the difference to the case in many ways.
The Client:
The first and most important is obviously the client. They are referred to in a legal funding contract as the beneficiary. Plaintiffs must be the victims of a personal injury claim that has substantial merit. The reason the case must have merit is that no legal funder will advance money without an expectation of being paid back. The client must also be facing some sort of financial hardships. However, they have some trouble obtaining money from a bank or a credit card. Enters the next party to the funding agreement:
The Broker:
The next important player in these accident funding contracts is often but not always the broker. More often as of late litigation funding brokers play an important part in facilitating a litigation funding contract. The broker’s role is to find the client that is in need of litigation funding and to marry them to the proper litigation finance company. Brokers generate leads to the accident funding company and in turn they get a referral fee from the funding company. A broker also connects the client with the appropriate funder depending upon the type of payments that are most appropriate or required. For example, higher fees at the end of the case; higher interest in the beginning; higher interest in the end. Those variables play a part in connecting the client with the litigation funding company when a broker is involved.
The Funder:
When a request for an advance arrives, the underwriter at the litigation finance company will decide whether to accept or reject the request. They will provide the cash that will be advanced to the client or lawyer. The underwriter is the 3rd important player after the client and possibly the brokers. Underwriters in legal fundings are similar to underwriters that one deals with when obtaining a bank loan. They require certain documents to be able to properly evaluate the quality of any given case. In turn these underwriters also decide how much money should be available to be advanced to these clients or lawyers.
The Attorney:
Finally, the final and almost most important player in a pre settlement funding funding is of course the attorney for the client. The whole process of accident funding hinges on the cooperation and assistance of the attorney. As is often the case the attorney will not cooperate with the litigation funding company for various reasons As they might have certain opinions about the funding industry for example. Therefore, the cooperation of an attorney is essential to the agreement as most funding companies will not advance money to an individual or a lawyer unless the lawyer is cooperating with the funding company. What is required of the attorney are two things: They must provide the documents that are requested by the underwriter for the underwriter to evaluate the case. The documents requested may not be limited to an accident report an MRI report an ER record.
The Attorney, Cont’d.
The attorney also is going to have to sign their portion of the legal funding contract while agreeing to place a lien on the proceeds of the client. Therefore, attorney holds the money for the funding company before paying out the settlement or verdict to the client. Therefore, the lawyer will follow the direction of the litigation funding contract and pay the funding company and the client accordingly. Most of what we refer to here are fundings that are given to personal injury victims who are seeking several thousand dollars. However, there is a whole other universe of litigation finance. The area that has more recently grown astronomically involves corporate or commercial litigation funding. That involves sharing in a percentage of a class-action or commercial corporate plaintiff lawsuit. Those types of funding involves tens if not hundreds of millions of dollars
Redwood Funding Group:
A smart attorney will find his or her client the best pre settlement funding deal. What does this mean for the client? It means the cheapest, fastest and best deal out there. Redwood Funding Group is the place. Why? because we will not rip you off like most litigation finance companies. Furthermore, Redwood Funding Group never works with brokers. This means we are cutting out an expensive part of the process. This can end up saving the client 30-50% of the interest if they used other funders.
Redwood, continued:
Lastly, at Redwood Funding Group, unlike most funders, you will pay no fees. Unlike most funders, you will paty no compound interest. At Redwood Funding Group you pay one fixed rate of 15%. That’s it. If you compare the repayments listed on our web site to any funder in the country, you will see how cheap we are. You will not find a cheaper accident funder than Redwood Funding Group.