Attorneys go through trials every day to represent their clients in court. These trials can take months or even years, causing some attorneys financial strain. Some law firms have the resources to support their employees during this time period financially, but most do not.
Attorneys who are representing clients on a contingency fee basis may have more difficulty staying afloat if they cannot continue working and collecting fees during this period.
This is where attorney funding comes in. Attorney funding is a service that provides cash advances to attorneys so they can pay the bills while waiting for trial or settlement checks to arrive or until their clients’ payments come in. The attorneys repay the money once they receive their settlement payment from the client and collect their fees and costs.
What is attorney funding?
Attorney funding is a type of cash advance specifically given to lawyers, or law firm than need cash advances for the ongoing lawsuit they are handling.
Lawyers use this type of funding to pay the ongoing costs of legal cases. The typical cases include personal injury claims, debt recovery, and commercial disputes.
After applying for an attorney loan, the client makes monthly payments toward the cost of their legal fees until they have been repaid in full. The entire repayment is due once the case settles or comes to a conclusion.
As with any type of borrowing, these types of loans have their advantages and disadvantages. If you find yourself faced with this kind of financial emergency, consider the benefits and drawbacks before deciding on attorney funding.
Pros of attorney funding
One of the biggest benefits of using this service is that it will help you avoid any type of legal problems while your case is ongoing. For instance, if you are in debt and do not receive the money you need on time to pay your bills, your credit can be negatively affected, and this could lead to lawsuits if your creditors file claims against you.
Another benefit is that attorney funding can also be useful in speeding up the process of receiving compensation for many types of cases. If your claim takes longer than expected, you may have accrued additional expenses while waiting to get paid. For example, if you are waiting for a personal injury claim to be settled, you could pay for your medications and medical bills out-of-pocket.
Attorney funding can also be useful if the amount of money you need is too much to receive by other types of borrowing methods. If this is the case, then an attorney loan could be a great alternative.
Cons of attorney funding
One aspect that is not necessarily advantageous with this type of borrowing has to do with the interest rates. Some loan companies charge higher interest rates than others, but attorney loans generally have higher rates than standard loans.
Additionally, if you cannot repay the loan on time, you may be charged additional fees, and your interest rates could also go up. Some companies will even charge a late fee each month if your payment is not fully received by its due date.
Because attorney funding can have a negative effect on your credit score, it is important to consider how borrowing money in this manner could affect you in the future.
Also, if you cannot repay your attorney loan as expected or promised, you may lose your right to continue with the rest of your case. If you do not use the money you are borrowing to pay for relevant legal expenses, the court could take the funds away from you.
Attorney funding should only be used as a last resort when other options have been eliminated.
Before using this type of funding, consider other alternatives, such as asking family members or friends for help rather than borrowing money from a company that could potentially affect your case. You might not need all of the money, and you should only request what you need to avoid getting into more debt than you can handle.
If you decide to apply for attorney funding, be sure to choose a reputable and reliable company like ECO pre-settlement funding that has the lowest interest rates to best suit your situation.