What’s the Application Process for Litigation Funding?

Key Takeaways

• The primary criteria considered for receiving litigation funding are your likelihood of winning your case as well as the size of the potential profit.
• The application and funding process typically involves an online form, a case evaluation with your attorney, the collection of any relevant documents, and finally, approval to receive funding.
• Once you’re approved, you’ll likely receive funding within a day—like a cash advance on your settlement! However, it’s important to beware of high interest rates and fees associated with this type of funding.

Eligibility Criteria

A variety of types of cases may be eligible for litigation funding, but some are far more common than others in terms of eligibility. For instance, class action lawsuits, personal injury lawsuits, corporate lawsuits, and intellectual property and patent lawsuits commonly receive legal funding. 

Any civil or commercial litigation with a high likelihood of success, but the plaintiff of which lacks the funds to pursue, is eligible to apply for litigation funding. 

Potential criteria considered in the application process tend to include the strength of the case (how likely the claimant, and therefore, the third-party funder, is to win the case and profit) as well as the potential damages (the size of the potential profit).

Application Process

The application process to receive litigation funding is quick but thorough. Here’s what you can expect if you plan to apply for funding for your case.

Initial Application

You can usually complete an online form with your lawsuit loan firm or litigation funder of choice to act as your initial application. Alternatively, you can call or visit the company in person for more information.

Case Evaluation

The litigation funding firm will then review your application and contact your attorney for assistance in evaluating your case. This is the part of the process where the company will consider how likely you are to win your case as well as the size of the potential profit.

Documentation

You may need to provide additional documentation in order to assist the company in evaluating your case. This might include any documents relevant to the case (such as key contracts and any work you’ve done to estimate a realistic claim size). 

You may also be asked for personal documents such as financial records/bank statements that show your current financial position.

Approval and Funding

Once your case is approved, you’ll come to a litigation funding agreement and receive your cash very quickly—sometimes within 24 hours! You may then proceed with your case with the financial backing of the company to which you’ve applied. 

This may cover legal expenses and even medical and living expenses during the litigation process, which buys you time to focus on your case.

Documentation Required

You may be required to provide documentation to your lawsuit loan company of choice as a supplement to your application. This requirement will probably include any documents relevant to the case or which outline its details as well as any relevant contracts. If you’ve done work with your lawyer to determine an estimated claim size, that documentation may be required as well. 

Nearly all of the information we need relates directly to your case. We do not look at employment history, nor do we require background or credit checks. However, we do search public records for tax liens and bankruptcy issues that could impact your settlement.

Case Evaluation Process

Your litigation funding company will likely work directly with your lawyer to evaluate your case and subsequently draft a litigation funding arrangement. Your lawyer will present the company with any relevant information on the details of your case and work with the company to finalize an estimate on the size of your claim. 

The primary factor being considered here is how likely you are to win your case (and therefore, how likely it is that both you and the lawsuit loan company will profit). The size of the potential profit is also considered, as well as due diligence on your background and current financial situation.

Approval and Funding

Litigation funding and lawsuit loans are often approved quite quickly—ranging between a few hours to 1-2 business days. Once you’re approved, you’ll accept the cash advance provided by your lawsuit loan company. 

Since lawsuit loans are non-recourse, third-party litigation, funding often comes with high interest rates and steep attorney fees. This means it’s essential to assess the financial risk before applying for litigation funding. For instance, if your case takes a long time to come to trial (as is the case with many personal injury lawsuits), you may end up handing over a large portion of your settlement or worse, owing more than you were lent.