Myths of Legal Funding
Legal funding has changed over the last couple of decades to emerge as one of the fastest growing financial trends in the US today. However, many financial and legal professionals still remain unfamiliar with the how legal funding works.
Some myths come from the early days of legal funding, when there were legitimate issues within the industry. But today, most myths are simply misconceptions that continue to be promulgated without being based on facts. Let’s take a look at some of the more common myths about legal funding.
Legal Funding is Exploitative
A common misconception about legal funding is that lawyers or their clients will be exploited during this vulnerable time and funders will take advantage. And some attorneys have a presumption that unethical funders may prey upon clients who are in desperate circumstances. But in fact, legal funding can be a lifeline for those who feel they have run out of options. With the legal process moving at a snail’s pace and financial burdens piling up, legal funding can be a necessary safety net to keep food on the table and pay the bills.
Funding Firms are Unethical
Attorneys sometimes can be leery of recommending legal funding groups to their clients for fear of interference in the legal process. The attorney may have concerns that the funder will pressure them to settle quickly in order to get their repayment of the advance. But this simply isn’t true. Lawsuit funding groups go above and beyond to ensure that they have no influence or control over the lawsuit, and this is explicitly spelled out in the pre-settlement funding agreement. Legal funders do have the ability to monitor the progress of the case, as they should. But this in no way has any influence on how the case is handled or litigated.
The Underwriting Process is Long and Invasive
While some loans can take days to underwrite and approve at other legal funding groups, Signal can approve a pre-settlement funding advance in as little as 24 hours. After the client fills out the application, Signal will call the attorney to discuss basic details about the case. Once approved, an agreement will be sent to the attorney and client to review, sign and return. Funds can be distributed by check via overnight.
Legal funding can alleviate the stress for attorneys’ clients that are struggling financially. Lawsuit funding groups can bring relief for financial burdens to these clients as the legal process unfolds, which in many cases can take years. Being educated on how legal funding can assist your clients during the legal process is essential to counseling clients on their financial options. In the event that clients seek legal funding on their own, it’s best to have a clear understanding of what is all involved in the process in order to best advise your clients.