Legal Funding: The Myths

More: Myths about legal funding.

The Myths Surrounding Legal Funding

Legal funding is a rapidly emerging financial trend in the U.S. With industry leaders now reviewing more than 25,000 lawsuit cash advance applications each month, legal funding has risen from relative obscurity ten years ago to the forefront of marketplace solutions for clients.

But despite the strong foothold it has gained in the legal system, some myths about legal funding continue to exist. Some of these myths are rooted in legitimate problems that existed when legal funding first appeared on the scene, others still circulate throughout the legal community with no basis to support them.

Legal Funding Myth #1: Lawsuit Cash Advances Exploit Vulnerable Plaintiffs.

One of the common misconceptions about legal funding is that it takes advantage of vulnerable plaintiffs at a difficult time when they are least able to make financial decisions. This particular myth is prevalent among lawyers who fear unscrupulous lenders might use their clients situations for unfair advantage.

In reality however, this usually provides an escape hatch for people who have been backed into a corner by a combination of financial circumstances and the slow wheels of the legal process.

In Reality, Lawsuit Cash Advances Help Those Who Need It Most

A prototypical recipient of an advance is a working mom — a single parent head-of-household living week to week and paycheck to paycheck with no savings to speak of.

Without a financial cushion, an accident and injury can often result in a downward spiral. While legal expenses are handled on contingency basis, basic living expenses often present a significant challenge to many plaintiffs. With a lawsuit cash advance, a modest advance for day to day expenses provides relief from accumulating bills, potential eviction/foreclosure, and keeps food on the table for the clients family.

Rather than exploiting vulnerable plaintiffs, a lawsuit advance acts as a safety net for individuals who don’t have the resources to withstand prolonged litigation on their own. Without third-party funding, a difficult financial situation would likely become a total financial disaster.

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