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How to Finance a Lawsuit if You Don’t Have Enough Funds

Filing a lawsuit regardless of the case involved can be expensive, not to mention time-consuming. And not everyone has the funds to pursue a legal action as they seek justice for the issue they are fighting for. It is for this reason that some people opt for an out-of-court settlement to help them save costs.

But what if you have a strong case and you’re concerned about funds to finance the process moving forward? Are there other options apart from obtaining personal loans from the bank or a lender and borrowing from family and friends?

A good option to consider is applying for a so-called lawsuit loan. This type of loan also known as a lawsuit cash advance or loan on lawsuit can help you pay for legal fees and other necessary costs until settlement. This financial aid works by purchasing your right to all or part of your settlement in exchange for funds to cover your medical costs and costs of living including rent and bills while your case is on trial. It can surely ease your financial burden and ensure that your lawyer will be able to do what’s right to help you get justice.

But while this funding can solve your financial needs for the short-term, it may cost you more in the long-term. As such, do research about the pros and cons before you make a decision.

What’s Involved in a Lawsuit Loan

A lawsuit loan is not known among many people and is often offered to plaintiffs who are expecting to win in their lawsuits. It is provided by a third party not involved in the lawsuit to finance the litigation of the borrower in exchange for a portion of any financial gain from such legal action. The funds are released before the lawsuits are resolved.

In existence for more than 20 years now, this litigation funding has benefited businesses of all sizes as well as major universities and even Fortune 500 companies. While its name suggests it’s suited for use in litigations and other legal-related expenses, the funding can actually be used for other purposes such as working capital for companies with lawsuits on trial and personal expenses of business owners. The Citywide Law Group can help answer your questions at

However, this lawsuit loan can cost you more than the money you borrowed. The interest rates can go up from 27 percent to as much as 60 percent per year. As such, you can be paying a huge amount of money if your case takes years to settle.

Do take note as well that not all types of legal cases can qualify for a lawsuit funding. Lenders may screen lawsuits as they also want to make sure they will get back their money with the interest included.

On the other hand, plaintiffs who lose their cases need not pay back the loan they obtained. Also, if one settles for an amount less than he or she expected, they don’t have to pay more than the amount of their settlement. This is a risk on the part of the lenders and one of the primary reasons why obtaining a lawsuit loan costs more than other types of loan.

Basically, the main participants in this litigation funding are the plaintiffs, the investors or lenders and the lawyers. The role of attorneys here is to provide information to lenders about possible claims when the case is settled. They also serve as custodians of funds. Lenders, meanwhile, provide financial assistance to plaintiffs who are in dire need of cash to pursue their legal action until settlement.

Again, do weigh the pros and cons of getting a lawsuit loan first if you are considering it for your case. Do some research and seek advice from your attorney if necessary to guide you in your decision.