It can take a long time for a case to wind its way through the courts. During that time attorneys continue to accrue expenses associated with trying to win the case, and their clients still have bills to pay, and often, additional expenses associated with an injury from which the lawsuit originated (like medical bills).
Sometimes plaintiffs (the attorney’s client) lose their ability to work as the result of injury or negligence on the part of the defendant (the party being sued), and no longer have stable income, or in some cases, any income. They need money to survive on both while the case is working its way through the court system, and later, once the case is concluded, while they wait on the defendant (the party who was sued) to pay.
Many people are not aware of this, but once a court case concludes or is settled, it can still take months and sometimes years before a defendant pays what they owe to attorneys and their clients.
This article focuses on the things both attorneys and their clients can do to try and shorten the time it takes to get some of their money to help offset the financial burden associated with a length court case.
In this case, we are going to discuss post settlement funding as a vehicle by which plaintiff attorneys (and their clients) can shorten the time it takes to get at some of the money they are owed once a case concludes or is settled.
Post Settlement Funding is a financial vehicle by which plaintiff attorneys (as well as their clients) can gain early access to money owed to them from a settlement or award once a court case concludes. It is not a loan. Instead, it is an advance against the expected settlement amount. The money plaintiffs (the attorney’s clients) are owed from a settlement or settlement award is considered an asset and like any asset, can be sold to a third party at an agreed upon price. For lawyers, the contingency fees they are owed from a court case they have won, is also considered an asset, and like any asset, can be sold to a third part at an agreed upon price. When you utilize post settlement funding, you are selling some of the money you are owed from your case to a third party at a discount. We will explain this in detail in this article.
Post Settlement Funding Companies are not all the same. Some are brokers, meaning they are “middlemen” for legal funding transactions, not the source of the funding themselves. Hedge funds are sometimes involved in legal funding (especially pre-settlement funding) of large cases to help finance attorneys taking on larger cases, and achieving larger settlements for their clients. And then there are private legal funding companies like Balanced Bridge Funding who are direct lenders (not brokers) and specialize in legal funding vehicles like post settlement funding. Because there are so many different entities involved in legal funding, it is important to be clear about fees, timelines, terms, and where your money is coming from.
How Contingency Fee Lawyers Make Money
To understand the importance of post settlement funding, you first have to understand a little bit about the legal industry and how things work. When it comes to litigation work, meaning taking individuals, companies, or entities to court, many attorneys work on a contingency fee basis. Lawyers who specialize in this type of work are commonly known as Plaintiff Attorneys, or Contingency Fee Lawyers.
Contingency fee lawyers are paid in a variety of ways. The most common way is through a percentage of the total amount recovered from the defendant (the party being sued). They get a percentage of whatever amount they “win” for their client.
As an example, if a contingency fee lawyer is able to win a $100,000 settlement for their client, they will take a percentage of that amount as their fee. If they take 30% (as an example), they receive $30,000 in contingency fees, and the client receives $70,000.
Why Do Contingency Fee Lawyers Charge So Much?
It might seem as though plaintiff attorneys’ contingency fees are high, but you have to consider the risk they are taking, the up-front cost of litigating the case, the amount of time it takes fir the case to conclude, and the time they spend waiting to finally get paid.
- Risk – Attorneys who work on a contingency fee basis are taking all the risk up front. If they don’t win your case, they don’t get paid.
- Expenses – If your case should go to trail, it is very expensive. Your lawyer will need to hire expert witnesses, investigators, technology experts, discovery experts, and trial presentation services. They have to pay out court costs, travel expenses, and payroll if they need to take on additional paralegals. All of these things and people are expensive, and your lawyer doesn’t get paid until after they win your case, and then they still have to wait for the defendant to pay. Imagine financing a court case for years out of your own savings. Because that is what your attorney has to do.
- Time – it can take years for cases to settle; this is especially true when it comes to suing insurance companies – they can drag out a simple case for years before they settle. During that time, your lawyer has to pay their own office rent, staff salaries and overhead. Plus, they have to keep up with the case, keep talking to the defendant, make motions, argue against motions the defendant makes, and more.
This is why contingency fee lawyers charge so much for their services – because it is expensive for them, and often takes years to get their money back and turn a profit. And if they don’t win your case, they get nothing back. This is very high risk. And the more risk people take, the more reward they expect to get back when they succeed. Lawyers are no different.
You Can Wait A Long Time to Finally Get Paid From a Lawsuit
Something most people don’t understand about lawsuits is that even after they win, or the defendant settles, they aren’t going to have a check waiting for you in the lobby. Nor are you going to see that check next week or probably even next month. In some cases, plaintiffs (and their attorneys) wait years to receive their money from a settlement or after the conclusion of a lawsuit. In the case of large class action lawsuits, some plaintiffs have had to wait more than ten years to get paid from a settlement; and that was after waiting years for the case to conclude.
Once a case settles or a judgement is ordered against a defendant, there is a lot that goes into determining how and when the defendant (the person you sued) has to pay what they owe. Courts are unlikely to “bankrupt a business” to pay plaintiffs (though this does happen). Often, especially in the case of very large awards or settlements, the defendant is allowed to pay claims over some specified period. In some cases that could be ten years or longer.
In early 2021, USC settled a sexual assault case brought by over seven hundred women, for over $800 Million Dollars – what most people don’t know is that it took six months for USC to make their first payments after the case settled, and they didn’t make their final payments until August of 2022, well over a year later. Even though the defendant had BILLIONS in their endowment fund, the court still allowed them to pay over time.
So, imagine the timeline in a scenario like the USC case: You have been injured or wronged by a person, group, company, or institution, and then you are finally able to get an attorney to take the case – and then the case drags on for YEARS in preparation, depositions, discovery, investigation, back and forth between the defendants lawyers, the judge, filing various motions, addressing various motions, and finally the case settles after all of that, and then you still have to wait eighteen months to get any money. That is a long time to wait.
Or imagine the BP Oil Spill off the coast of Louisiana – that case dragged on for over ten years, and to this day (as of 2022), there are still millions of dollars from that case being held for plaintiffs by the treasury department who are trying to find these people and give them their money.
This is where post settlement funding comes in. It allows you to get some of your money right away once a case concludes, instead of being forced to wait for the defendant to pay you. You can use your post settlement funding advance to provide the financial support you need to cover your living expenses and other costs while you wait to receive your settlement award.
What are the benefits of post settlement funding for plaintiffs?
There are several benefits of post settlement funding, including:
- You can receive funds quickly after reaching a financial settlement
- You can use the funds for various purposes, including paying off debts, making investments, or covering basic living expenses
- Post settlement funding can provide you with financial security and peace of mind
Post Settlement Funding – Why Attorneys Need Access to Money Now
If you’re an attorney, post-settlement funding can be a great way to get the money you need to cover your expenses. Whether you’re looking to pay for expenses, fund new cases, or simply want to have some extra cash on hand, post-settlement funding can be a helpful option.
There are a few things to keep in mind when considering post-settlement funding, however. First, it’s important to understand that post-settlement funding is not a loan. It is an advance on the money you are owed (for a fee).
Second, post-settlement funding is typically only available after you’ve reached a settlement with the other party. This means that if you’re still in the middle of negotiations, post-settlement funding may not be an option.
How Post Settlement Funding for Plaintiff Attorneys works:
When you win a case, or have billed a client, and are waiting to be paid from either the lawsuit or the client, you can “sell” all or a portion of the money that is owed to you to a legal funding company like Balanced Bridge Funding for a fee.
You get some of your money right away, and when the bill is paid by the client or lawsuit, we get paid directly from the client or the attorney of record (in the case of a lawsuit settlement award).
It is as simple as that. You get your money now, and we get paid to do the waiting for you.
This type of transaction historically was known as factoring. Most industries take advantage of using factoring companies to help solve their cash flow challenges. Law firms who operate on a contingency fee basis are no different.
How Post Settlement Funding for Plaintiff Attorneys Works Infographic*
Let Us Explain How Post Settlement Funding Works
- Attorney has settlement in a case but will experience some delay before their contingency fee is distributed to them.
- Attorney applies for a post-settlement advance with Balanced Bridge Funding.
- Balanced Bridge examines the case. A determination is made on how much of the fee Balanced Bridge will purchase and how much will be advanced to the attorney.
- Balanced Bridge discusses the funding terms with the attorney and provides them with the agreement to review and sign.
- Once that is all completed, Balanced Bridge wires the advance directly to a bank account specified by the attorney.
This process is often completed in a day or two but can take longer.
Once the fee is distributed, Balanced Bridge is sent its portion of the fee.
Is Post Settlement Funding for Plaintiff Attorneys A Loan?
A post settlement advance for Plaintiff Attorneys is not a loan. When you receive a settlement advance, the legal funding company does not loan you money. The fees you are owed from a lawsuit are considered an asset (like a stock or bond). And just like any other asset you own (like a stock, bond, or your car or house); you can sell it to someone else for an agreed price.
Using the example from the infographic above, this person agreed to sell $50,000 of their fees for the price of $45,000. The settlement advance company now OWNS the right to $50,000 of the lawsuit settlement and will receive their $50,000 directly from the case attorney of record. They bought the asset from you for $45,000 and will receive $50,000 from the attorney of record when the settlement award is paid, earning the legal funding company $5,000.
Who Pays the Legal Funding Company Back?
Remember, this isn’t a loan. As a post settlement advance company, we purchase the asset from you, and then we own it. You do not have to pay us back; instead, we notify the attorney of record of our ownership of a portion of your settlement award, and when the defendant pays, the attorney of record will pay us directly. There is nothing for you to do.
Is Post Settlement Funding Taxed?
In most cases yes, your contingency fees (for attorneys) are considered income. Your settlement award (for plaintiffs) will generally be treated as income by the IRS. You should consult your CPA or attorney to fully understand the tax consequences of a legal settlement for you as an individual.
Post Settlement Advances for Plaintiffs – Settlement Advances for Plaintiffs helps reduce the time it takes to receive some of your money from a class action lawsuit settlement.
It takes a long time for most class action lawsuits to reach their conclusion, and when they do, you might expect to receive your money quickly, but this is rarely the case. It can take up to two years (and sometimes much longer) for the defendant to pay everyone involved.
In spring of 2021 USC (University of Southern California) was ordered to pay a massive award to victims who were sexually assaulted by one of their employees; but it took nearly six months for the first group of people to receive their money, and a second group had to wait eighteen months (August 2022) to receive their payment from this landmark class action lawsuit.
Historically there wasn’t much you could do about the waiting period. You just had to wait. But not anymore. Now you can get some of your money right away using a financial vehicle called Settlement Advance for Class Action Lawsuits.
When you are owed settlement money from a class action lawsuit, the money you are owed is considered an asset, like a stock or bond. And just like a stock or bond, you have the right to sell that asset to someone else for an agreed upon price any time you feel like selling it. This arrangement is in the legal industry is commonly known as a settlement advance, post settlement advance, settlement loan, settlement funding, lawsuit loans and other names.
The rest of this article will explain how settlement advances for class action plaintiffs work, what you can use your settlement advance for, and some other details we think you should be aware of regarding settlement advances for plaintiffs.
Is it Difficult to Get a Post Settlement Funding?
Taking out a post settlement advance is easy. It isn’t a loan, so it isn’t dependent on your credit score. This is one of the benefits of working with a professional Legal Funding Company – we know what needs to be done and we do most of the work for you. You fill out the application and we do the rest. You don’t even have to pay the money back yourself. Legal funding companies get their money directly from the settlement attorney of record once they start paying everyone from the lawsuit. Getting a settlement advance might be one of the easiest things you do while dealing with a class action lawsuit.
What do Plaintiffs Use Post Settlement Funding For?
Most of the time, plaintiffs use their post settlement advance to help pay bills. Some people use their settlement advance money to relocate. Others use their settlement funding to back to school and learn new skills. Some people use their post settlement advance to buy a home, car, or take a trip. Unlike a loan, a settlement advance is your money. If you sold some stock, the proceeds from that sale are yours to do whatever you want to do with the money – a settlement advance is no different. It’s your money and you can do what you want with it.
How Does Post Settlement Funding for Plaintiffs Work?
How Settlement Funding for Plaintiffs Works Infographic
Let us explain how a settlement advance for a plaintiff works
- Plaintiff has settlement in a case but will experience some delay before their award is distributed to them.
- Plaintiff applies for a settlement advance with Balanced Bridge Funding.
- Balanced Bridge examines the case. A determination is made on how much of the fee Balanced Bridge will purchase and how much will be advanced to the plaintiff
- Balanced Bridge discusses the funding terms with the plaintiff and provides them with the agreement to review and sign.
- Once that is completed, Balanced Bridge wires the advance directly to a bank account specified by the plaintiff
This process is often completed in a day or two but can take longer.
Once the fee is distributed, Balanced Bridge is sent its portion of the fee.
Is Post Settlement Funding A Loan?
Post settlement funding is not a loan. When you receive a post settlement advance, the legal funding company does not loan you money. The money you are owed from a lawsuit is considered an asset (like a stock or bond). And just like any other asset you own (like a stock, bond, or your car or house); you can sell it to someone else for an agreed price.
Using the example from the infographic above, this person agreed to sell $50,000 of their lawsuit settlement for the price of $45,000. The settlement advance company now OWNS the right to $50,000 of the lawsuit settlement and will receive their money directly from the settlement. They bought the asset from for $45,000 and will receive $50,000 from the settlement attorney of record when the settlement is paid, earning the legal funding company $5,000.
So as you can see, post settlement funding does not in any way operate like a loan.
Who Pays the Settlement Advance Company Back?
The post settlement advance company is paid directly by the attorney of record for the case. Remember, this isn’t a loan. There aren’t payments to make. The post settlement advance company is purchasing this asset from you, and then they own it. You do not have to pay them back; instead, once you have signed all of your paperwork, the post settlement funding advance company notifies the attorney of record of their ownership of their portion of your settlement award, and when the lawsuit settlement pays out, the attorney of record will pay the legal funding company directly. There is nothing for you to do.
How Much of My Lawsuit Settlement Can I Sell to Receive an Advance?
In most cases, you will be able to sell up to 50% of your class action lawsuit settlement. But you will not be able to sell 100% of it to a third-party legal funding company.
Is There a Minimum Amount of Post Settlement Funding I Must Take Out?
We can’t speak for other post settlement funding advance companies, but at Balanced Bridge Funding the minimum we are willing to advance is $10,000. And because we can only advance 50% of the total amount owed to you, you must have at least $20,000 (total) coming to you from your lawsuit to qualify for post settlement funding.
Do I have to pay taxes on my post settlement funding advance?
We cannot give you any advice personally, but generally, yes, you will. You are selling an asset, and when you sell an asset of any kind, whether it is a stock, bond, or home, you can expect to pay taxes on all, or a portion, of the amount of the sale. But, this is not always the case. There are types of settlements that could be except from taxation. You should consult with your attorney and/or CPA to understand the tax consequences of selling your lawsuit settlement to a lawsuit financing company like Balanced Bridge Funding.
As Plaintiff, Can’t I Just Get a Settlement Advance From My Lawyer?
No, you can’t. Lawyers are not allowed to loan money to their clients. This is an ethical violation on their part. Plus, judges are very aware of the pre-settlement and post settlement funding industry, and they are constantly watching to make sure this sort of scenario does not happen. Why? Because loaning money to clients could have undue influence on the Plaintiff Attorney and the way they present and handle the case for their clients ; judges watch for this sort of thing carefully. This is one of the reasons third party legal finance companies exist, because your lawyer is not allowed to loan you money or purchase part of your settlement. Even if they could afford to do so, and even when it would help you out a great deal, your lawyer cannot loan you (or advance you) money.
Plaintiffs – Don’t Make The Wait Longer Than it Has to Be
There are a lot of things plaintiffs do that delay receiving their settlement money that are easily avoidable. We included the following information to help make sure you avoid making any of these mistakes. Even if you sell a significant amount of your pending settlement award to take out a post settlement advance, you will still have some money owed to you from the settlement. Make sure you do not create situations where your final settlement check will be delayed. You will have to wait as it is. So don’t make the wait longer than it must be.
Update Your Contact Information – Make sure you update your contact information with the attorney of record if anything chances. One thing we encourage you to do is make certain that if you are involved in a lawsuit, that the attorney of record has your updated contact information. Lawsuits can drag on for years; during that time, you might relocate, or change phone numbers, or emails. If the attorney of record has to find you, then contact you, and then verify that it is you, all of this takes time and causes delays. Always update your contact information with the attorney of record (and your own attorney) if it changes.
Updated Bank Account Information – Many lawsuits, especially class action lawsuits, distribute funds by depositing the funds directly into your bank account. If you change bank accounts, which people do all the time, make sure you update the attorney of record. They don’t always “look” for you. In some cases, as with the BP Oil spill, they simply turn the money over to the treasury department of the state the lawsuit was filed in, and then it is on you to claim it for yourself. So if you update your banking information, make sure to update the attorneys.
Release forms – It is mandatory that you sign a release form to get your money. Release forms not being signed is another way your funds might be delayed. Today, technology is helping a great deal with this, as you can often sign your release form online as part of the process. But most companies are not going to pay you until your release form is signed, so make certain that it is, so you don’t further delay receiving your settlement money.
The bottom line is – don’t make it hard for the attorney of record to find you. As of March 2021, $700 million dollars of funds were turned over the treasurer of the State of Louisiana from the BP Oil Spill Lawsuit – this is money that people are owed, who probably didn’t update their contact information and couldn’t be found by the attorney of record in the case and the money is just sitting there waiting to be claimed. One person is owed $68,000 in that case, but they don’t know how to contact them so the money is just sitting in the state treasury waiting to be claimed.
Legal Funding Companies
There are many post settlement legal funding companies that can help you with your post settlement needs. These companies can provide you with the money you need to pay your bills and living expenses while you wait for your case to settle. They can also help you with your legal fees and other costs associated with your case.
If you are a plaintiff in a personal injury case, you may be able to get post settlement funding from a legal funding company. This type of funding can help you pay your medical bills and living expenses while you wait for your case to settle. It can also help you with your legal fees and other costs associated with your case.
If you are an attorney who represents plaintiffs in personal injury cases, you may be able to get post settlement funding from a legal funding company. This type of funding can help you pay your legal fees and other costs associated with your case.
There are many post settlement funding companies that can help you with your post settlement needs. You should contact a few of these companies to see if they can help you with your particular situation.
Conclusion
If you are a plaintiff involved in a legal case that has settled, post settlement funding may be an option for you. This type of funding can help you pay your bills and living expenses while you wait for your case to settle.
If you are a plaintiff attorney, post settlement funding can help you take out an advance on legal fees you are owed once a case has concluded.
Post Settlement Legal Funding is not a loan. Instead, the legal funding company purchases a portion of the settlement award you are owed for a small fee. You do not pay the legal funding company back directly. Instead, they notify the attorney of record of their claim, and when the defendant pays, the attorney of record pays the legal funding company directly.
It can take a long time to get paid from a lawsuit. Even after the lawsuit is concluded, people sometimes wait years to actually get their money, in in some cases never get any money at all if the defendant files for bankruptcy protection, or simply refuses to pay what they owe. Legal funding a way for plaintiffs and their attorneys to get some of their money right away to help cover expenses.
About Post Settlement Funding From Balanced Bridge Funding:
Does Balanced Bridge Funding offer Pre-Settlement Funding as well as Post Settlement Funding?
Balanced Bridge does not offer pre-settlement funding solutions for plaintiffs at this time. We do offer post settlement funding; meaning, once your class action lawsuit has settled or concluded, and you are owed a settlement, we can offer you a settlement advance (if you qualify). But no, we do not offer pre-settlement funding options at this time.
Post Settlement Funding is a Non-Recourse Transaction: We Accept All the Risk
Class Action Lawsuit funding is a non-recourse transaction. This means you don’t need to worry about what might happen if the defendant suddenly can’t pay your settlement award — we accept all risk of non-payment, meaning that you will still get to keep the money from your settlement advance if the defendant goes bankrupt or is unable to pay for whatever reason.
Fast, Hassle Free Application
In most cases we can get your money in your hands in one week or less. Our application is simple, straightforward, and easy to complete. Remember, this isn’t a loan, so there isn’t as much paperwork to go through. In most cases, we can approve your application and have your money deposited into your checking account in a matter of days.
Class Action Lawsuit Funding for Plaintiffs: If you think our settlement funding solution could be the right fit for you, please call one of our legal funding specialists at 267-457-4540.
Or to apply online, simply CLICK HERE and fill out our quick form application.
