Personal injury plaintiffs who are looking for a way to get money until they are able to receive their personal injury settlement often get confused by the legal funding industry. First, many personal injury plaintiffs do not understand what legal funding is. Legal funding is when a company that is not involved in a lawsuit provides money to the plaintiffs in a pending lawsuit in exchange for payment after the settlement is received. Legal funding does not require any upfront payments and does not have to be paid back unless and until a settlement is reached.
After learning what legal funding is, many personal injury plaintiffs want to know what the difference between pre-settlement funding, legal funding, lawsuit funding, personal injury lawsuit funding , and legal financing are. Basically, they are all the same thing. Individuals in the legal funding industry often use these terms interchangeably.
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Another term that is frequently used to refer to legal funding is “lawsuit loan”. However, “lawsuit loan” is not an entirely accurate description of legal funding. Legal funding is not a loan. It is a non-recourse cash advance on a pending personal injury lawsuit. Loans must be paid back. Non-recourse cash advances on personal injury lawsuits will not necessarily be paid back. These advances are only paid back if there is a settlement in the case. Thus, non-recourse lawsuit cash advances can be very beneficial to personal injury plaintiffs. If something goes wrong, they will not be in debt for the advance they received on their lawsuit.
Although the legal funding industry confuses many personal injury plaintiffs at first, the industry ultimately makes life easier for personal injury plaintiffs. If you are interested in legal funding or have additional questions, give Pegasus Legal Funding a call today.
Max Alperovich is a Partner and co-founder of Pegasus Legal Funding, LLC. Max was an early adopter and identified third-party litigation funding as a mutually beneficial endeavor for both client and funder relationships.
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