The Different Types of Legal Funding Options Explained

Legal funding has many different names but the core purpose is always the same. With the term “legal funding” people often define a legal practice that allows a third party to provide capital funding to plaintiffs during their lawsuit cases in return for a portion of the settlement which often gives plaintiffs a better chance of getting a fair trial and even a large settlement and at the same time it gives them the opportunity to cover any costs the trial entails. Legal funding has made the world of law and more generally the legal system more accessible even for people who are facing financial difficulties. There are different types of legal funding though and in this article, you can learn all about their differences.

The Two Main Categories

Pre-settlement funding has two main categories, called consumer and commercial litigation. This type of funding helps plaintiffs in different ways but they both provide some leeway and financial support.

Commercial litigation invests in legal claim cases which normally relate to business-to-business disputes. Normally these are high-profile cases with a higher level of complexity. These cases also involve more settlement payments or damages. Consumer litigation, on the other hand, involves individuals with personal injury cases as the name suggests and there are many types of consumer litigation but the main ones these days are discrimination, consumer fraud, medical malpractice, and many more. 

Who Is Eligible?

Commercial litigations normally work with businesses as mentioned above and they help protect a business's commercial rights and interest these fundings often cover the legal fees but not for free of course. Normally this is done as an exchange and the funding firm gets a percentage of the future compensation. 

Consumer litigation works with all those individuals who have no prior experience with this kind of system. Many times, legal firms offer upfront cash, which is used to cover expenses and legal fees, as well as medical costs and other possible personal expenses. 

What Is Post-Settlement Funding?

There are other types of funding as well and one of them is post-settlement funding. This type of funding is a great financial instrument that helps individuals and their attorneys take out an advance on their settlement. On a case-to-case basis, post-settlement funding might be an option as this is often necessary due to the possibility for a trial to continue for a long time. This type of funding provides financial relief which is often needed after waiting a long time for a case to finally end in a favorable way. 

This is also beneficial due to the fact that even if a settlement has been reached, plaintiffs often find themselves waiting for months, or even years, to get their awards. This is most of all the case with cases that involve minors, governments, international entities, and others. Thankfully, the post-settlement fund is an option that you should consider if you find yourself in financial need after a trial.

To Conclude

This article talked about the different kinds of funding that belong to the field of law. It highlighted the main types of funding and it also provided a short but useful map of their characteristics and specifics. Thanks to this short list you now have a better overview of this matter which is useful to have when facing a trial or a similar matter.

As law processes often take a long time to end, many people out there need some financial aid before, during, or after this process has ended. That’s why these types of funds are likely to be extremely helpful for the majority of people facing the law.