Investing in Pending Lawsuit Cases
Among the many ingenuous ways of investments so as to make good returns, is investing in lawsuit funding transactions. While the risks are great, so are the returns.
Lawsuit funding transactions involved provide funding to a plaintiff who is involved in a lawsuit which he cannot afford. An example you can take is that of a person who gets injured in an accident due to the negligence of the opposite party. In this case the injured party is allowed to file personal injury litigation which would require settlement, if proven. The problem faced by plaintiffs in this case is that these cases may go on for a long time, during which time they may suffer from financial crunches, not the least of which is the medical bills. Hence they end up requiring money, which is where lawsuit funding transactions figure in.
The lawyer is forbidden from lending money to the plaintiff, which is why they require funding. Since loans in this case are not very advisable, they being difficult for the plaintiff to pay (the plaintiffs don't usually have the necessary creditworthiness), lawsuit funding is done. These are provided by companies who specialize in the business.
The lawsuit funding is taken as an investment rather than as loan. This means that the plaintiff is liable to pay only if he receives adequate settlement. If he does receive the settlement, the returns are very high. Usually you get certain fee such as application fee and origination fee (which is a percentage of the total money given or invested) as well as an interest which is compounded monthly. This could amount even up to 50 per cent of the original investment.
The accident and personal injury case is just an example. Lawsuit funding is requested by plaintiffs in all sorts of cases including those which deal with fraudulent investments such as stocks, bonds, commodities etc as well as commercial litigations which involve companies rather than individuals.
There are two risks involved:
The plaintiff may not get any settlement. Usually companies who are involved in the transaction study the case thoroughly to ensure that the case is worthy of financing. If the case has chances of being thrown out of court, there isn't any chance of a lawsuit funding company funding the litigation. Also, the high returns sort of justify the high risks.
The plaintiff may refuse pay citing loan instead of investment. While this has happened in some cases, court rulings in the majority of cases have been favorable to investors. Examples are "Saladini versus Righellis" in Massachusetts Supreme court and "Osprey, Inc versus Cabana Limited Partnership" in South Carolina Supreme Court. In both cases the investors got their money. There has been an Ohio case ("Rancman versus Interim Settlement Funding Corp.") with the result in favor of the original plaintiff, but this seems to be one of a kind.
You might want to make sure that your investments are safe by doing a thorough research on the company or lawyers who will manage your investment for you. If you do that, then investing in lawsuit funding transactions is a very good idea with high returns.
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Frequently Asked Questions
- 10 Steps involved in selling your structured settlement.
- Can a lawsuit loan really make my case stronger?
- Will the national pension elimination make structured settlements disappear too?
- Why can't my attorney give me a lawsuit loan?
- Only sell structured settlements to litigation funding providers you trust.