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Litigation Funding’s Benefits and Risks for Personal Injury

  • Written by The Times

Benefits and Risks of Litigation Funding for Personal Injury Claims

Litigation funding is now typical in handling personal injury claims and cases. This is the practice of giving financial support to a plaintiff in a lawsuit. The funder will get a share of the settlement if the litigant wins.

As much as litigation funding provides funds, it has its own benefits and risks that you should know. Learn more about them so that you can make an informed decision.

What Is a Personal Injury Claim?

A personal injury claim is a type of claim in which an individual pursues financial compensation after suffering from harm or injury due to another person's intentional actions or negligence. Personal injury can be harm done to a person’s body, emotions, or reputation. They come in various combinations of damages, like pain and suffering, medical expenses, lost wages, and mental and emotional distress. If you've experienced any of these harm and damages, file a personal injury lawsuit.

Other kinds of personal injury include: 

  • Traffic collision
  • Medical malpractice
  • Wrongful death—where a person dies due to intentional purposes or negligence
  • Animal attacks, which include cases like dog bites
  • Product liability or harm done through products due to design, marketing, or manufacturing defects.
  • Battery and assault—a person is injured due to the intentional actions of another person.

How Litigation Funding Benefits Personal Injury Cases

Litigation funding can be used to pursue personal injury claims. Here’s how you can benefit from it:

Financial Assistance

One major benefit of litigation funding for your personal injury case is financial assistance if you’re struggling financially because of your injuries. This money can cover living expenses, financial obligations, legal fees, and medical bills as the case goes on. You won’t need to worry much about getting money for your needs.

High-Quality Legal Representation

Litigation funding helps plaintiffs get the best personal injury lawyer from a top law firm. These people can help you win your case as they are more equipped with personal injury law and the nature of personal injury lawsuits.

Ensure a Fair Game

Personal injury cases can be expensive to process. Litigation funders provide a fair playing field for plaintiffs with financial support to compete with their well-funded opponents.

Zero Repayment for Unsuccessful Cases

You don’t need to repay the funds if the case doesn’t reach a favorable judgment. You don’t bear the financial burden of paying when your case is unsuccessful. 

Get Faster Settlements

Defendants may get some encouragement to pay personal injury settlement earlier than planned since they know the plaintiffs have pre-settlement funding to pursue the case until the end. 

Litigants can also wait for a fairer and better settlement while getting legal funding to cover litigation costs. This prevents them from accepting a lesser settlement they don’t deserve due to financial pressure.

Preserve Personal Assets

Personal injury litigation funding helps you preserve your personal assets while pursuing your legal claim. It benefits you a lot, especially if you can’t report to work due to your injuries.

The Risks of Litigation Funding for Personal Injury Cases

While the benefits of litigation finance can help you, these risks also come with personal injury lawsuit funding:

High Cost

Legal financing can be quite expensive. Some funders may charge high fees and interest rates that can reduce the settlement you will receive later on, leaving you with a small amount of money that doesn’t compensate for your distress.

Potential Conflicts of Interest

Some funders may have a financial interest in the case’s results. They can pressure a litigant to settle for a lesser settlement to secure their return on investment quickly. This potential conflict of interest can heavily affect the plaintiff instead of helping them bounce back.

Possible Impact on Settlement Negotiations

Some defendants may not be that eager or interested to negotiate a settlement when they hear that you have personal injury lawsuit loans. This may lead to more prolonged litigation proceedings and an excruciating waiting period for you to get your settlement.

Limited Regulations

Litigation funding may not be heavily regulated in some states. This may leave you helpless when you encounter unethical funders. Read and understand the funding agreement before signing any document.

Reduced Amount of Damages

When jurisdictions hear that a plaintiff has secured personal injury loans, they might reduce the damages they will get. Dubbed as the collateral source rule, this may vary depending on the state you live in.

Final Words

Litigation funding financially supports plaintiffs involved in personal injury cases, like medical malpractice claims. Before entering into an agreement, weighing the benefits and risks of this kind of funding is crucial. Consider which funder has the best chance of helping you win the case without feeling shortchanged.

Legal battles can exhaust you physically, mentally, and financially. In times like these, it’s best to partner with a financing firm in the small circle of the litigation funding industry to help you with your case. These firms can recommend the best lawyers from a single law firm to prepare a strong argument on your behalf. Work with a funder that can give you a fair share of financial resources to win legal battles for personal injury.


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