Explaining Legal Funding to New Clients

10-09-2014 | Dojo |

Legal funding has now emerged into a dependable source of finances. The options in the past were very limited and the victims had no other choice but to accept and settle whatever the defense offered.

Now, it’s become an option for the victims to go yo a third-party lender instead. In this case they don’t have to accept a rushed settlement, which the defense most likely will always do.

Best of all, they don’t have to worry about lawyer’s fees skyrocketing and bills accumulating. But if you don’t work in the legal world or in the finance business, you will find yourself in a black hole full of confusing jargon.

Let’s have some of these terms explained to you for the non-adept in the hopes that in the future, you are armed with some background.

Important Legal Funding Words

All legal cases differ depending on what kind of lawsuit it may be, or who gets the money, or the size of the lawsuit claim. In finance, the cases may also differ but generally, these terms are juggled between the two.

legal-fundingPhotoBy: Domiriel (Flickr)


When you hear the word LOAN, the first thing that comes to your mind is money. It is a set amount of funds given to “loaner” or borrower for a set period of time and not without conditions that the said amount will be returned under. Just to be clear, legal funding is not a loan.

Personal Injury

As obvious as it may seem, it is an injury to a person’s body or mental state, which occurred because of an accident.


All courts want to have a settlement rather than go to court which will be more expensive (lawyer’s fees, court fees, expert’s fees, etc.) and time-consuming. So at the very onset of the case, a settlement or a resolution of the lawsuit is offered without actually having to go to court. This involves a settlement offer with specific amount details offered to the plaintiff. In return, a time frame is given for them to accept or reject.

Legal claim

This is the loss that the plaintiff suffered or might suffer. A claim is an amount that he needs to get back due to certain losses.

Take for example a car accident. The plaintiff or victim tells the judge that the accident caused him damages and therefore, wants to sue the offending party. This money is for medical bills incurred because of the accident (x-ray, medicines, doctor’s fees, etc.), car repair (even if he has insurance) and lost wages because of non-work.

Lump Sum

It is the single payment of the funds claimed.

Disbursement Funding

Money release to you after your application for funding has been approved. Usually, the financial centre or adviser will decide on an appropriate amount needed to pay whatever bills you need to pay. Usually, the applicant states the way he’d like the money released. It can either be through bank wire or certified check.

Pre-settlement funding

This is often called legal funding and is considered once you’ve had the original settlement offer. This type of funding is usually happens in with personal injury cases. After your injury, bills will pile up and you will need more money than the original offer that the defense was willing to pay for.

Contingent non-recourse funding

The one who will provide the funds will only get paid if the litigant (the offender) collects money in the process of the lawsuit and at the same time collects funds from his other assets. Legal funding institutions need to choose to invest wisely and to choose cases that they know and foresee that will win in court. Why? Because if they provide funding and the client loses in court, they will not get repaid.

Choose a legitimate legal funding financial firm

So whether you’ve been in a car accident and weren’t able to go to work due to your injuries or you’re in the middle of a sticky situation with divorce settlements and lawsuits, always seek help from experts who know the business of legal funding. A good financial adviser will be able to expedite your case with the best intentions in mind.

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