Litigation loans help clients move forward
By Rob Lamberti, AdvocateDaily.com Contributor
Litigation loans can assist claimants during lengthy court proceedings, ensuring their bills are paid while seeking a fair settlement, says CaseMark Financial’s client relations manger, Dawn Simons.
Plaintiffs who hired a lawyer on a contingency basis often can’t rely on traditional sources of income — including employment, financial institutions, and benefits suppliers — to ensure their mortgage and other necessary expenses are paid, she says.
"CaseMark provides litigation funding solutions based on the merits of the legal claim rather than traditional factors such as credit scores or current employment," Simons tells AdvocateDaily.com. She says funding allows plaintiffs and their lawyers to work towards achieving the full value of a claim.
In many cases, those suffering a serious injury are already living paycheque to paycheque prior to an accident, and some lawyers don’t understand the reality of the financial difficulties many plaintiffs face, she says.
“It can take years for a claim to resolve, however bills and financial obligations don't wait and continue to require payment. Without traditional sources of credit available, claimants are left with limited options such as bankruptcy or a consumer proposal. A settlement loan — usually processed within 24-48 hours — can fill the gaps without impacting their credit history,” Simons says.
She says she's seen plaintiffs resort to filing for bankruptcy because they didn’t have the funds to carry them through their legal claim.
"It makes no sense, as the consequences of filing bankruptcy will likely impact them long after their claim has been resolved," Simons says.
"We help them on a daily basis with those things you think of as the most elementary, basic living expenses that many people take for granted," she says. "Litigation can take a long time and opposing insurers are not friendly."
Litigation funding can help sustain plaintiffs while they await resolution of their claim, Simons says.
She notes a case where a client was offered an initial settlement of $80,000 but ended up with $640,000 within nine months because the insurer knew he had the financial backing to withstand a protracted legal battle and that a continued action could have exposed them to a greater amount.
Litigation funding is sometimes viewed in a negative light, but Simons says clients can ensure they’re dealing with a reputable firm by asking questions, including what the interest rate is and if there any hidden fees or charges.
Not being vigilant at the outset could significantly reduce the amount clients end up with, she warns.
"In one recent case, the bailiff and the creditor were going to change the locks of the house of a woman who had lost her husband in a tragic accident, and we were able to provide a $50,000 loan within 24 hours, allowing her to keep her home,” she says.
The pressures of mounting expenses without a source of income can add significantly to the stress of those suffering from injuries, Simons says.
“Those stresses could force plaintiffs into a corner where they accept a lesser settlement because they don’t think they have another choice,” she says. “If plaintiffs can borrow funds to relieve the financial burden, they don’t have to accept an undervalued settlement or pressure their lawyer to conclude the claim prematurely."
It’s also in the lawyers’ interest to maximize the appropriate compensation as a larger settlement can yield higher fees, Simons says.
"There are real benefits and advantages to obtaining litigation loans for plaintiffs and lawyers alike," she says. “After an incident, life goes on and bills pile up, the mortgage or rent is due and people still need to eat and somehow survive.
"Time is not on the victim's side and the legal process is often long and complex, not to mention that injuries can take years to heal or present their ultimate consequences. Litigation funding often fills these gaps and helps clients move forward."