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Consumer Special Features

Both Law Firms and Plaintiffs Benefit from the Expanding Consumer Legal Funding Industry

By John Freund |

The following piece is a contribution by Charles W. Price, CEO of Capital Now Funding, LLC. 

The following scenario was once all too common – plaintiffs injured in an accident, waiting impatiently for a complex lawsuit to settle. With the clock ticking and the plaintiff often unable to work, there was little they could do except wait for the phone to ring while medical and other bills kept piling up. Meanwhile, their attorneys must candidly tell them that it will be weeks to months or years before they might receive their settlement money.

Faced with this situation, it was not at all surprising that clients grew increasingly frustrated, gradually giving way to worry, fear and anxiety. And dealing with this level of stress, plaintiffs were capable of placing unneeded pressure on their attorneys to settle before the legal process had fully played out. Attorneys, who naturally want to get the best possible settlement for their clients, were often faced with having to settle prematurely even though they knew that a much better resolution could soon be reached.

Fortunately, a better solution has emerged in recent years that meets the needs of all parties – Consumer Legal Funding. Consumer Legal Funding is often mislabeled and referred to as a pre-settlement loan or a loan against a lawsuit, but it is not technically a loan. Consumer Legal Funding is legal funding that is advanced from a portion of the consumer’s future settlement proceeds. As defined by Eric Schuller with the Alliance for Responsible Consumer Legal Funding, providing a client with consumer legal funding is merely the purchase of an asset – a portion of the consumer’s future settlement proceeds. In essence, plaintiffs are borrowing from their own future settlement funds.

How Do All Parties Benefit?

The real story of consumer legal funding is best viewed in light of the benefits it provides. For the plaintiffs, the benefits include:

  • Immediate, much-needed financial assistance to pay medical, housing and living expenses while their legal claim is in process
  • Zero to no risk to the consumer, since consumer legal funding is non-recourse (which means that if the plaintiff loses the case, they do not have to pay the funding company back)
  • Better relationships with their attorneys, as attorneys generally play a positive role in approving consumer legal funding
  • Avoids the need to turn to other, riskier forms of borrowing, which may result in unnecessary debt
  • Plaintiffs are in a much better position to receive the best possible legal settlement

For attorneys representing the plaintiffs, the benefits include:

  • Reduced pressure to settle a case too soon and accept a settlement that is less than deserved
  • Adequate time to get the best possible outcome for clients
  • Immediate relief for plaintiff clients struggling with bill payments when they may be unable to work due to accident injuries
  • Better relationships with their clients, who need the legal funding as well as the added time for the attorney to properly settle their case
  • Improved communications with their clients during the course of the case, as clients who are under less financial pressure will make for a better settlement outcome
  • More favorable attorney reviews and increased referrals from happier clients

Understanding The Basics of Consumer Legal Funding

Once you know how the consumer legal funding process works, it’s easy to see what a valuable solution it is for both plaintiffs and attorneys.

Pre-settlement legal funding is a great description of this funding, because the funding company actually provides funds to a plaintiff prior to the legal settlement of their case. The pre-settlement funds are usually taken from the portion of the total funds that will be dispersed at the time the case is settled. Pre-settlement funds are intended to help a plaintiff cover medical and living expenses until the case settles and settlement funds are received.

But it all begins with the attorneys.

Why Law Firms Should Be Involved In The Process

It is essential for the law firm to approve the funding amount given to the plaintiff, as the attorney must confirm that the case is legitimate and has a strong likelihood of being settled favorably. This approval by the attorney is the signal for the funding company that the plaintiff’s case is deserving of legal funding. Pre-settlement funds do not have to be repaid if the plaintiff were to lose the case. Most often, when the plaintiff wins or favorably settles their case, the attorney will repay the pre-settlement amount to the funding company out of the settlement funds at the time the case is settled.

Clearly, providing plaintiffs with the ability to receive financial assistance while their legal claim is in process is a benefit when they have nowhere else to turn and no other assets of significance to leverage for capital.

As The Consumer Legal Funding Industry Has Evolved, It Has Greatly Improved

In the past, some attorneys may have been hesitant to recommend pre-settlement funding for their clients because they may have been concerned over the perception of getting involved in the process, or worried about it from an ethics compliance standpoint. However, over recent years, bar associations and state licensing agencies have upheld, and now agree, that pre-settlement legal funding is a highly beneficial product.

Additionally, in the past, when there were not a lot of options for pre-settlement legal funding companies, clients may have been charged unnecessarily high fees and interest on funds with an indefinite payback period. As a result, if the case went on longer than expected, the client could be left with a payoff that was more than their settlement.

This just isn’t the case any longer. As the industry has matured and evolved, products and options have improved. States have implemented laws regulating the amount of fees that can be charged by pre-settlement funding companies and have required increased disclosure and transparency.

Additionally, the fees being charged have become more competitive, and companies like Capital Now Funding have joined the industry who are dedicated to providing fully transparent payoffs that are fixed for the life of the case with zero interest.

What is most essential in order to benefit the consumer is that law firms have access to legal funding companies they trust and can recommend to their clients. It is important that the attorney helps their client properly evaluate the funding company. Always look for a legal funding company with positive reviews, and one that is forthcoming about its fee structure.

Everyone Wins

As an attorney or law firm, you’re only going to see the benefits of pre-settlement funding if you choose the right consumer legal funding provider. Different providers have different terms and conditions, different fees and interest rates, and different levels of service and communication. Make sure you choose a good fit for you and your clients’ needs.

About the Author

Charles W. Price is Chief Executive Officer of Capital Now Funding, LLC, a nationwide provider of pre-settlement funding for personal injury cases. Capital Now Funding provides industry leading Fixed Fee funding with zero interest, which protects clients and preserves their ultimate settlement amount. For more information, you can contact Charles at cwprice@capitalnowfunding.com.

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Announcements Consumer

Legal-Bay Legal Funding Announces Dedication to Focus on Securities Fraud and FINRA Arbitrations

By John Freund |

Legal-Bay LLC, The Lawsuit Pre Settlement Funding Company, announced today its focus on funding Securities Fraud and FINRA Arbitration cases for the remainder of 2024 and beyond. The legal funding firm has noticed a major deficiency in the legal funding sphere for specialized funding options for Securities Fraud cases and FINRA arbitrations, as these are some of the toughest cases to approve and understand within legal funding.

However, with two decades of experience in funding complex cases of all natures with creative yet straightforward funding solutions, Legal-Bay is widely recognized throughout the lawsuit funding industry as one of the "best lawsuit loan companies" or "go-to funder" for securities fraud cases and FINRA arbitrations against major brokerage firms.

Whether you are a plaintiff that lost a good majority of assets or a law firm looking for case costs to fight a large brokerage firm, or someone who lost assets due to fraud and needs money now, Legal-Bay can help you. Please visit our website geared specifically toward these types of cases, at: https://lawsuitssettlementfunding.com/securities-fraud.php 

Legal-Bay's team of experts and underwriting department can quickly evaluate the validity of your claim(s) and potential case value and provide you with the capital you need to see your case through. Too often, plaintiffs or lawyers simply cannot wait all the years these complex fraud cases can drag out without obtaining some sort of large cash advance in the meantime.

It is for this reason that Legal-Bay has committed extensive capital to funding plaintiffs and law firms that find themselves in dire financial situations due to instances of securities fraud. To learn more, feel free to call Legal-Bay today to speak with one of our courteous and knowledgeable staff, at: 877.571.0405.

Chris Janish, CEO, commented, "Securities or stock brokerage fraud cases are some of the most difficult in the legal finance industry to evaluate and fund. It is without question that our firm is one of the few niche funders in this space that has the expertise to evaluate your FINRA arbitration case quickly and accurately for settlement value and for needed cash advance approval."

To apply right now for your Securities Fraud pre-settlement cash advance or FINRA arbitration settlement cash advance, please visit Legal-Bay's page dedicated solely to these types of cases, at: https://lawsuitssettlementfunding.com/securities-fraud.php 

You don't have to wait for the money you deserve. Clients only have to pay back the Securities Fraud advance or FINRA Arbitration case loan if and when they win their case, meaning the money is risk-free. All you need in order to apply for the quick and immediate cash relief—typically provided within 24-48 hours following approval—is a lawyer. Even if you don't yet have a lawyer, Legal-Bay can help you with that too, as Legal-Bay works with the country's top Securities Fraud attorneys who will fight for you to ensure you receive the compensation you deserve.

Legal-Bay is a leader in personal injury lawsuit loans or commercial litigation settlement loans, as commonly referred to by plaintiffs. Although referred to as loans for settlements, the legal funding advances are not pre settlement loans at all, as they only need to be paid back if your case is won. FINRA arbitrations are considered commercial settlement funding and most typical litigation funding firms do not even consider these cases, however, Legal-Bay is happy to freely evaluate your case for funding. Funds can be used for personal use or for paying for expert witnesses or trial costs prior to an arbitration hearing.

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Consumer Special Features

Does Consumer Legal Funding Put Consumers in Debt?

By John Freund |
The following article was contributed by Eric Schuller, President of the Alliance for Responsible Consumer Legal Funding (ARC). There has been a lot of discussion if Consumer legal funding is a loan and thereby creates debt for a consumer Consumer legal funding, sometimes called litigation funding or lawsuit funding, provides cash upfront to plaintiffs, to be used for household needs, which are involved in legal proceedings in exchange for a portion of the eventual settlement or judgment. It doesn't create debt like a loan from a bank or credit card, these distinctions contribute to its classification as a unique financial product rather than a loan or debt.
  • Non-recourse nature: Unlike loans, where the consumer is personally liable for repayment regardless of the outcome, consumer legal funding is non-recourse. This means that if the plaintiff loses their case, they are not obligated to repay the funding. The repayment is contingent upon the success of the lawsuit.
  • No monthly payments: In a loan, borrowers usually make monthly payments to repay the principal amount plus interest. With consumer legal funding, there are usually no monthly payments required. Instead, repayment only occurs if and when the case is settled or won, and the repayment is often structured as a lump sum.
  • Risk sharing: Consumer legal funding providers assume a significant amount of risk by providing funds to plaintiffs who may not ultimately win their case. Unlike lenders who typically assess creditworthiness and require collateral, consumer legal funding companies evaluate the strength of the case and base their decision on the likelihood of success and not the creditworthiness of the consumer.
  • Not regulated as loans: Consumer legal funding is often subject to different regulations than loans. While loans are typically governed by banking and lending laws, consumer legal funding has its own set of regulations that ensures consumers are protected and the product is offered in a responsible manner.
Some of the other key differences between consumer legal funding and debt from a loan is in how repayment works. With a loan, the consumer borrows money and agrees to repay it with interest, regardless of the outcome of the situation, creating debt. However, with consumer legal funding, repayment is contingent upon the success of the case. If the consumer loses their case, they will not have to repay the funding. But if they win, they will have to pay back the amount funded, with fees that are known upfront. So, therefore consumer legal funding doesn't create debt. Unlike Consumer legal funding, some loans can put consumers in a cycle of debt. The term cycle of debt refers to a pattern where individuals or households become trapped in a recurring pattern of borrowing money to meet financial obligations, only to find themselves in even greater debt over time. This cycle often involves:
  • Initial Borrowing: The cycle typically begins with an initial borrowing of money, such as taking out a loan, using a credit card, or obtaining other forms of credit to cover expenses or emergencies.
  • Accumulation of Interest and Fees: As time passes, the borrower may struggle to make timely payments on their debts, leading to the accumulation of interest charges, late fees, and other penalties.
  • Financial Strain: The increasing debt burden can put a strain on the borrower's finances, making it difficult to cover basic living expenses and other financial obligations.
  • Additional Borrowing: To address their financial difficulties, borrowers may resort to additional borrowing or using high-cost forms of credit, such as payday loans or cash advances, to make ends meet.
  • Repayment Challenges: The cycle continues as the borrower struggles to keep up with mounting debt payments, leading to further financial stress and the need for more borrowing.
  • Escalating Debt: Without significant changes in financial habits or circumstances, the debt continues to escalate, with the borrower owing more money than they can realistically repay.
Breaking the cycle of debt often requires proactive steps such as budgeting, reducing expenses, increasing income, seeking financial counseling, and finding ways to pay down debt strategically. It may also involve negotiating with creditors, consolidating debts, or exploring debt relief options such as debt settlement or bankruptcy. Consumers who use Consumer legal funding are never placed in a cycle of debt. Consumer legal funding has many other positives to a consumer besides not placing them in debt.
  • Immediate Financial Assistance: Consumer legal funding provides plaintiffs with immediate cash to cover living expenses, medical bills, legal fees, and other costs associated with their lawsuit. This can be particularly helpful for individuals facing financial hardship due to their inability to work or other circumstances related to their legal case.
  • Non-Recourse: Consumer legal funding is non-recourse, meaning that if the plaintiff loses their case, they are not obligated to repay the funding. This reduces the financial risk for the plaintiff, as they only repay the funding if they win their case.
  • Leveling the Playing Field: Consumer legal funding can help level the playing field in legal disputes by providing plaintiffs with the financial resources to pursue their case effectively. This is particularly beneficial for individuals who are up against well-funded defendants or corporations.
  • No Upfront Costs: Unlike loans, consumer legal funding does not require upfront payments or monthly repayments. Instead, repayment is structured with a known outcome and amount.
Overall, consumer legal funding can be a valuable resource for plaintiffs in need of financial assistance during legal proceedings without putting them in debt. Eric Schuller President Alliance for Responsible Consumer Legal Funding (ARC)
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Announcements Consumer

Mass Tort Industry Leader Nicholas D’Aquilla Joins Counsel Financial

By John Freund |

In a strategic move to bolster its litigation finance and loan servicing capabilities, Counsel Financial welcomes Nicholas (Nick) D’Aquilla, Esq. as its new Managing Director. With over a decade of experience in the mass tort industry and as a former civil defense litigator for the Louisiana Department of Justice, D’Aquilla brings a wealth of knowledge and a proven track record of success to the Counsel Financial leadership team.

D’Aquilla has distinguished himself as a leading figure in administering complex settlements, contributing to the administration of more than $20 billion in mass tort settlements across many high-profile cases. His expertise in solution design and oversight services has contributed to the resolution of more than 40 mass tort and class action litigations, spanning environmental, pharmaceutical, medical device, and sexual assault matters.

D'Aquilla will focus on enhancing Counsel Financial's mass tort underwriting processes and loan servicing offering, enhancing the development of valuation models based on historical settlement data. He will also leverage his experience as a consultant for multiple legal technology companies to help drive continued refinement of the company's servicing platform.

“Adding Nick to our team marks a significant enhancement of our litigation finance and loan servicing offerings,” said Paul Cody, President & CEO of Counsel Financial. “Coupling our team’s 200+ years of legal, financial and litigation experience with Nick’s knowledge and insight into the mass tort sector provides unparalleled resources that can be leveraged by both our law firm clients and institutional investors utilizing our servicing platform.”

Before joining Counsel Financial, D’Aquilla played a pivotal role in a complex settlement fund advisory team for a national bank, where he developed innovative underwriting methodologies that enabled credit extensions to mass tort plaintiffs’ firms. There, he also analyzed and valued over $1.5 billion in loan collateral derived from mass tort dockets.

About Counsel Financial

Counsel Financial is an industry leader in originating, underwriting and servicing loans and other financing solutions for contingent fee law firms. For over two decades, Counsel Financial has provided more than $2 billion in capital investments across 300+ law firms. These investments have financed the growth of firms in every area of plaintiffs’ litigation, including personal injury, mass torts, class action and labor and employment.

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