Lawsuit
Financing:
An
Exciting New Niche In The Cash Flow Industry (Part Two)
This is the second part of a series of articles on the specific
field of Lawsuit Financing.
In
this part we will get into identifying your market for Pre-Settlement
Funding clients, characteristics of and requirements for clients,
and the “nitty-gritty” of what Pre-settlement Lawsuit Funding is
and is not.
Who
Are Your Clients?
Most
often your clients are the plaintiffs in the lawsuit. They are the
injured parties seeking compensation most often in the form of MONEY.
If they are not trying to get money out of the defendant (the defendant
is the one who is being sued because the plaintiff thinks they are
responsible for the plaintiff’s injuries) then we are not interested
in funding them. More often than not, we will be dealing with Personal
Injury (PI) cases. The majority of these will be automobile accidents
with an expected settlement in excess of $50K and funding requests
between $5-10K. But do not limit yourself to marketing to this field.
As you can see in the chart below, there are many more types of
lawsuits that can be funded.
Submit a client if the client:
·
Has been injured in an auto accident
· Is involved in a medical malpractice case
· Is a plaintiff in a wrongful death case
· Is a plaintiff in a commercial or civil litigation case
· Had a serious slip and fall accident
· Is a plaintiff who needs money to pay for expert witnesses
or case costs
· Has been injured on the job
· Has been discriminated against
· Was in a boating accident
· Is involved in a commercial maritime injury claim
· Has relatives who are victims of nursing home abuse
· Is a part of a class action claim
· Small action claims
· Workers’ compensation claims
· Has a product liability claim
· Settled cases waiting payoffs
· Cases awaiting appeals
· Is expecting a minimum settlement of $20,000
The
client must be represented by an attorney, and need money prior
to settlement due to financial hardship.
Usually, the plaintiff's financial hardship is the result of being
injured and not being able to work. If they are not working they
are not making any money. If they are not making any money they
cannot pay their bills. These bills could be everyday living expenses,
or may be the direct result of the injury such as medical and rehabilitation
costs. It may be the cost of replacing the car that was damaged.
Very often we see people using this money to stop foreclosure on
their homes, to stop eviction proceedings or to prevent their car
from being repossessed.
On
the other side of the table there is the defendant who is usually
represented by an insurance company, or is an entity of large net
worth. We are not interested in funding them. After all they have
the money the plaintiff - our potential client - is trying to get!
Who Else Are Your Clients?
Although we will be focusing most of our marketing towards plaintiffs,
remember pre-settlement cash is available to attorneys as well.
Law offices are like any other businesses. They experience cash
crunches as part of their growing pains. For example, on a simple
case an attorney may have $1-2,000 in out of pocket costs. That
same attorney may have 100-200 open cases. Simple arithmetic tells
me that is a whole lot of money, especially when you consider that
most law firms have more than one attorney. Money is made available
for attorneys for things like, expert witness research, expert witness
testimony, and attorneys’ fees.
What
Exactly is Pre-settlement Lawsuit Funding?
It's
easy to mistake or confuse Pre-settlement Lawsuit Financing for
something it isn't. Not that I am a contrarian, but let me explain
this by first stating what it is not.
Pre-Settlement Lawsuit Financing is NOT:
- A
FULL PAYOUT
Usually the funded amount is limited to no more than 10%-20% of
what the funding source thinks the case will settle for.
- A
LOAN
There is no interest charged on the advance given to the plaintiff,
only fees. There are no daily, weekly, monthly, or yearly payments
being made by the plaintiff. The plaintiff is only required to pay
back the money advanced and fees accrued if and only if they win
their case. In other words, if their case doesn't settle, they do
not owe the amount funded or the fees. This is the risk the funding
source takes.
This is also known as a "non-recourse"
transaction. Non-recourse means the funding source can not expect
the plaintiff to "make good" on the amount advanced, should
the case fail to settle.
- A
SETTLEMENT
The plaintiff must still try to win their case in the courts, the
same as if they were not using pre-settlement financing services.
The plaintiff must still try to collect from the defendant.
Typically, (if there is such a thing as typical
in this business) financing is not available before the case is
at least 6 months old. Why? During the first 6 months of a suit,
the “discovery” is taking place. Discovery is lawyer-speak for collecting
all the information related to the case. This often includes medical
treatments and evaluations that can take weeks or months to complete.
If a case is particularly complicated, it could take months researching
all the other cases that relate to this case as well.
NOTE: The major exception to this 6-month time frame
is if there is clearly no doubt as to who is at fault and how much
damage was done. An example of this would be if somebody was legally
stopped at a traffic light and they were hit by a car that was out
of control driven by somebody who was drunk at the time. This is
especially true if the plaintiff needs medical treatment immediately
for which they do not have insurance coverage, or the money to pay
for the medical services.
- BUYING
PAYMENTS
I often hear about people getting workers' compensation payments
that they want to sell. This is not something you can finance. However,
if the payments they are collecting are the result of a “Structured
Settlement,” that is something with which you can help them.
So
What Is It?
Pre-settlement
Lawsuit Financing is:
A TIME ADVANTAGE
Pre-settlement Lawsuit Financing levels the playing field. Without
it, the advantage of time is on the side of the defense. After all,
they are not the one who is damaged. The longer they hold onto their
money the happier they are. The more financially desperate the plaintiff,
the more likely they are to settle their case prematurely and for
less money.
MONEY PAID IN ADVANCE OF A SETTLEMENT
Money is available to both plaintiffs and their attorneys to ease
their financial hardship. Remember, every case is evaluated on an
individual basis and funds are made available accordingly.
NO RISK
To the plaintiff that is. These are non-recourse transactions. If
the plaintiff does not win their case, they do not owe any money.
Period! The money that was advanced is not owed. Any fees that may
have accrued are not owed. Zilch! Nada! Nothing!
AN
ADDITIONAL OBLIGATION ON THE CASE
The money financed is secured with either a lien or a letter of
protection with the attorney, and with signed contracts with the
client. This obligation is "behind" (or after) the attorney’s
lien, and if there are any, the medical liens. In other words, the
funding source is second or third in line to be paid.
Clearly, the funding sources take a huge risk in
funding a case. Understanding the risk they take will help you feel
confident in marketing pre-settlement lawsuit financing as a viable
alternative to the financial hardship many plaintiffs face. This
is a service that helps people when they need it the most!
In
the next part, we will talk about how to get the information needed
to start the process of securing Pre-settlement Lawsuit funding
for your client. We will also talk about costs to the client and
the commissions you can earn. We will go into detail about how long
it takes to go from initial contact, to the time the client has
the money in the bank, to when (and this is the best part) you receive
your commission check.
In
the meantime…Be good to yourselves, and fair with each other.
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Eager
to get started? This
complete audio and ebook kit shows you how to profit
from the new and
growing cash flow
niche of Lawsuit Pre-settlement Financing! Get
started here... |
Richard
Shapiro, CFS, DCFS, is a Master Broker, a member of the Million
Dollar Club and a former visiting instructor for the Pino Training
Organization. Richard is the owner of Condor International Financial
Services, 3305 North Swan Road, Suite 109-148, Tucson, AZ 85712.
He can be reached by phone at, (520) 529-4960, or through fax at
(520) 299-3450. His E-mail address is, Condor@CondorFunding.com,
and his website is www.CondorFunding.com.
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