Lawsuit Loans versus Litigation Funding: What YOU Should Know

Ever since the practice hit US markets in the early 1990s, third-party lawsuit funding has seen a rapid increase in the legal industry. Now with a growing number of investment firms engaging in litigation funding; the industry has come under scrutiny from the judicial system, legal experts, and potential plaintiffs.  The relative infancy of alternative litigation financing, along with the predatory behaviors demonstrated by a few, has become cause for concern by many.

So how does one decide whether or not to seek out litigation funding? How does an entrepreneur determine whether or not they are being taken for ride with a high-interest lawsuit loan? How can a business owner find a litigation funding service that suits the needs of their company? Amerevision Legal Finance has the answers.

           What is a lawsuit loan, and should I seek one to finance my litigation? Sometimes referred to as a pre-settlement loan, lawsuit loans are typically cash advances given to plaintiffs who are awaiting a settlement, usually to cover living expenses until an offer is reached. These loans are typically reserved for those engaging in personal injury suits, or workplace related litigation. The interest rates and fees for this type of non-recourse debt are usually high, with clients re-paying financiers anywhere from 30 to 120 percent of their loan amount. Most legal experts advise plaintiffs to stay away from this type of funding, as it is often predatory and misleading in nature.

            How is litigation funding, like the type provided by Amerevision Legal Finance any different? Amerevision offers a special kind of non-recourse legal financing, where the plaintiff’s attorney fees and court costs are paid directly by the firm. Instead of providing plaintiffs with a cash advance just to charge steep interest rates at a later time, Amerevision leverages its own capital against the lawsuit; taking the risk of filing a lawsuit off the table for the client. This method is commonly seen in lawsuit matters involving large corporations who choose to shift the cost of litigation to a third-party, however Amerevision offers this same ethical approach for individuals and small businesses.

Which type of alternative legal financing should I seek for my lawsuit? Small business owners and entrepreneurs are advised to stay away from lenders that offer cash-advanced lawsuit loans due to their unregulated practices and high interest rates. Business owners who are considering a lawsuit should research companies like Amerevision that will relieve the burden of litigation costs, allowing them to focus their capitol on already present expenses.  Choosing the litigation funding route may not result in a quick, cash pay-off for filing a suit, however it has been shown that this course of action yields the highest potential for reaching an agreeable settlement.

In short, while lawsuit loans may appear attractive at first sight, as a business owner, you must decide whether or not the large burden of debt is truly in the best interest of your business. The alternative method of direct litigation funding via Amerevision is the best way for entrepreneurs who want to experience positive, long-term results from their litigation.​