By definition, a Legal Finance is a financial instrument that is provided by a lender to a borrower. The borrower is the party that is taking legal action against the defense. This legal action may be a personal injury case, commercial litigation claim, or a lawsuit. A lender will provide Legal financing against the initial claim or the actual lawsuit. A lender may also provide financing for a case that is already settled. A Legal Financing is a non-recourse advance, meaning that all contingency fees on advances are always based on the outcome of a case.
The advance is cash which is given ahead of time, based on merit, to a plaintiff or law firm. It provides sufficient funding for the client or law firm for the duration of the court proceedings and the declaration of a verdict, after which the plaintiff or law firm would be entitled to a fair percentage of the settlement. As a lawsuit funding firm, we invest in the lawsuit itself. This is not the same as advancing money to the client. Please note that these advances are not based on the bankruptcy status or creditworthiness of the beneficiary – You can have bad credit, no credit, or a bankruptcy, and still be eligible for a legal financing.