Do You Need to Return the Funding Amount to Your Litigation Funder If You Lose the Lawsuit?

Are you wondering how to deal with a lawsuit when you don’t have enough funds on your hands? Well, getting pre-settlement legal funding options from a third-party litigation funder would help you with that. Legal funding allows you to finance your lawsuit through third-party funders to get better legal assistance and cover your legal fees. Unlike traditional loans, you don’t need to keep any collateral or a good credit score to obtain the legal funding amount. All you’ll need is a strong case with a skilled lawyer. Upon winning the case, the financier will take a percentage from your settlement amount as the repayment.

But what if you lose the lawsuit? Do you have to return the pre-settlement funding amount? Does losing your lawsuit affect your pre-settlement funding? Let’s dive into the following blog post to learn more about third-party legal financing and what to do if you lose your case.

What will happen if you lose the lawsuit?

When you take a traditional loan to fund your lawsuit, you must repay the amount along with interest rates.

But the pre-settlement funding isn’t a loan.

It’s an advance amount on your potential lawsuit settlement.

You must repay the amount through an agreed-upon portion of the eventual compensation you have received on your lawsuit.

The third-party legal funder will provide you with the funding amount on the likelihood that your case will be successful.

Hence, if you lose the lawsuit, you don’t have to owe anything, as the pre-settlement funding is a ‘non-resource payment.’

What if the settlement amount is lower than your expectations?

Even if the settlement amount is lower than the amount you expected, you still have to repay the agreed-upon portion to the financier.

Thus, if the settlement amount ends up being less than you anticipated, you still have to pay the percentage you originally agreed to.

If the third-party legal financier provided you more than received in your settlement, they’ll still be entitled to their portion of the settlement amount based on what you’ve agreed to in the legal funding contract when receiving the pre-settlement funding.

Do you have to return the pre-settlement funding amount if you lose the case?

Are you anxious about repaying the pre-settlement funding amount when you lose the lawsuit?

Well, don’t be!

If you don’t win your case, you aren’t required to repay your pre-settlement legal financing amount.

You won’t be obligated to pay any agreed-upon portion of your settlement amount if the money isn’t recovered in your favour.

How to find the right third-party legal financier for your lawsuit funding?

Legal financing has become one of the most popular and powerful tools to fight a lawsuit across the world.

Hence, you’ll find tonnes of third-party legal funding firms across Australia.

However, all of them aren’t the same although they offer similar services.

Thus, you must consider the following factors when looking for one:

i) Expertise and reputation of the team

ii) Qualification and certification of the third-party funder

iii) Understanding of third-party legal financing and how it works

iv) Knowledge of the latest rules and regulations for funding a lawsuit in Australia

v) Referrals from previous clients

vi) Customer testimonials on the company website and other places, i.e., Google, etc.

vii) Estimated processing time for the pre-settlement funding

viii) Terms and conditions

ix) The estimated amount you’ll be receiving for your lawsuit

Bottom line

Are you wondering how to deal with your lawsuit without having sufficient funds on your hands? Well, taking pre-settlement funding from a third-party litigation funder would be the best way to do so. However, you must choose the right third-party legal financing firm and ensure to consider the required factors before finalising one.

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