Understanding Pre Settlement Funding
As a client looking for a lawsuit advance on your pending lawsuit, the most important aspect is getting the approval from underwriting.
The aim of these tips is to give you, the plaintiff some advice in getting your personal injury case approved and navigating the world of pre settlement funding.
The first step in getting your personal injury case approved for funding is getting the underwriters the requested paperwork on your case.
Cases where the client is proactive in assisting the gathering of this requested paperwork, have a much higher probability of approval.
Remember, you are the client, this is your case. You have every right to request documents on your case from your attorney. Having said that, here is the list of documents that underwriters would ideally like to review on personal injury cases:
- Police Report, Accident Report, or Incident Report
- Medical Records Relating to the Accident and Subsequent Treatment
- Insurance Coverage on the Defendant
- Copy of the Lawsuit (Complaint) if in Suit (i.e. if filed)
- Pay-off Information (if prior advances)
- Expert Reports, Analyses, Opinions, or investigative Reports
- Witness Statements
- Settlement Offers and Settlement Demands
Pre Settlement Funding and Your Auto Accident Police Report
The police report is important because it provides an independent party that documents an accident took place. They often include a lot of information, such as the parties involved, if anyone was issued a ticket or arrested, or if anyone was under the influence of drugs or alcohol.
Police reports will often indicate if the involved parties were taken to an ER and if an ambulance was used
Police reports often indicate which insurance companies are involved in the accident. And sometimes even state who was at fault, which can be important in determining the liability on a case. To obtain pre settlement funding on a motor vehicle accident, have a police report is essential.
Medical Records and Your Pre Settlement Loan
Secondly, medical records are critical because they go a long way in determining the severity of your injuries. The seriousness of your lawsuit is directly proportional to the value of your lawsuit. The more server your injuries, the more likely your case will settle for a larger dollar amount. And the more severe the injuries, the more likely we can approve you for a larger dollar amount.
Personal injury cases where the victim had to have surgery are almost always worth more than cases where the victim did not have surgery. It’s harder for the defendant’s attorney to attack an injury claim that required surgery. But it’s much easier to attack injuries that didn’t require surgery and to claim the plaintiff is simply faking the injury.
All pre settlement funding providers distinguish between injuries requiring surgery and injuries that do not. Injuries that not require surgery are referred to as “soft-tissue” injuries.
Therefore, in terms of medical records, we want to review the following:
- Ambulance/ER report if applicable.
- Initial ER records or initial treatment records
- Operative Surgery Reports
- MRI, X-Ray, and any imaging reports
- Insurance Coverage of the Defendant
To get approved for a pre settlement loan, the chiropractic records are not needed.
Pre Settlement Lawsuit Funding and Insurance Coverage
Knowing the insurance policy coverage limits from the defendant is extremely important for pre settlement funding. The defendant is the party you are suing.
The defendant is usually the one responsible for causing the accident. The limits on their insurance policy place a theoretical dollar limitation on the case. For example, if a defendant has a $100,000 policy limit, that may be the maximum value of the case. Often the legal funding company will only advance 10% of an insurance policy coverage limit. If the defendant has no insurance then as far as the legal funding company is concerned, the case has no value and will not be approved for funding.
To obtain a pre settlement loan, it’s essential that your lawyer provide a copy of the complaint. (The filed lawsuit in many states is called a “complaint”). When a lawsuit gets filed, this lets the pre settlement funding company know your attorney is serious.
The complaint is a legal pleading filed in civil court case that establishes the plaintiff’s case against the defendants.
The complaint is used to provide the court with notification and a basis for the case while providing notice to the defendants that a case has been filed against them.
The date a lawsuit is filed is important because it tells us how far along the case is, which gives us an idea how long it will be until settlement. So basically, the filed complaint gives an idea of how serious your attorney is, how experienced they are, and the maturity of the case. All this information helps the pre settlement funding company evaluate the case for funding.
Prior Advances and Your Pre Settlement Loan
Prior advances on the case are only applicable if you have received a prior advance on the case. If this is the situation, the pre settlement funding company requests the payoff information from the prior pre settlement funding company. The standard practice is to pay off the existing advance, and issue “new” money to the client. Pre settlement funding companies only allow one existing lien against your lawsuit at any given time.
We’ll have to buy-out any existing advance. This allows America Pride Legal Funding (as the current lawsuit funder) to have a priority lien on the case. For example, let’s say you have a $2,000 prior advance on your case. And you want an additional cash advance of $2,000. Let’s assume the payoff for the previous advance is $3,000. So, the pay-off plus the new advance would be $5,000. So, when a client has an existing lien, it is always more challenging to do an additional advance, but it is certainly possible depending on the injuries, insurance coverage, and liability of your case.
Expert Reports and Obtaining a Loan on a Lawsuit
Expert reports, analysis opinions, and investigative reports are important in evaluating medical malpractice, product liability cases, and in some instances- premises liability cases.
In these types of cases, it is always helpful to have an “expert” to evaluate your medical records and state in their expert opinion what went wrong. The expert’s opinion often forms the basis for these types of lawsuits. In medical malpractice cases, experts are usually other doctors. And in product liability cases the experts may be doctors, chemists, physicists, engineers or others.
Witness Statements are important in premise liability and slip and fall cases, especially, because it is common not to have a police report in these types of accidents. It is usually impossible to substantiate a claim that you fell, without a witness being present or an ambulance coming to get you. Ideally on premises and slip and fall cases, we like to see a police report, accident report, or incident report. However, if those do not exist, we often will want to see a witness statement to help substantiate your claim.
Offers and demands are important because they provide insight into the potential value of a case and the level of negotiation activity transpiring. Demands and offers therefore help the pre settlement funding company place a dollar value on the case, which is critical if we are going to approve the case for funding.
Attorney Communication if Essential for Pre Settlement Lawsuit Funding
We’ve now addressed all the main documents we request on personal injury cases.
The final area that can help improve your chances for an approval is in your communications and relationship with your attorney. Ultimately to fund your case, we will need your attorney’s full cooperation.
Your attorney will need to provide the us or any pre settlement funding company with the requested documents. The attorney’s assistant or paralegal is the one who prepares the requested documents. Once you are approved, your attorney will be required to sign on the contract, acknowledging the placement of the lien on the case. That’s all that is required of them.
Despite the legal funding industry’s footprint in the legal community, sometimes legal funding companies meet with resistance from law firms when their clients apply for a lawsuit cash advance. Although the lawsuit advance can be more expensive than a traditional bank loan, you can communicate to your attorney that you have done your own research and are aware of the costs, but your current financial situation necessitates your attorney’s cooperation.
Although the contingency fee arrangement between the attorney and client has done much to offer access to the courts and level the playing field for the plaintiff against large insurance companies – it has done nothing with respect to providing for plaintiff’s day-to-day living expenses while their claim is pending.
It is in this light that attorneys should view personal injury legal funding. Rather than taken as a choir for the attorney, it should truly be seen as a resource for their clients to exploit, while they wait on their settlements.
The amount pre settlement funding companies can advance is between 10-15% of the expected amount of the plaintiff’s personal injury lawsuit. This is the proportional amount to protect the plaintiff when a settlement is awarded. Much of the personal injury award already has been accounted for because the attorney will receive 33-40% and out of the plaintiff’s share any remaining liens must be taken care of including medical liens.