Understanding lawsuit funding companies

Types of Lawsuit Funding Companies

Lawsuit funding companies are in growing demand for plaintiffs nationwide. Plaintiffs can choose from an array of companies, but a lack of knowledge of how the industry actually works can jeopardize your ability to select the funder that actually is best for you. If you applied for lawsuit funding with another company and were denied legal finance, its possible that you simply selected the incorrect type of funder.

Litigation finance providers generally fall into two categories: consumer and commercial.

Consumer litigation finance, also known as lawsuit funding, lawsuit advances and settlement funding, is a highly regulated industry that often lends personal injury plaintiffs money for living expenses until their cases settle. Consumer lawsuit funding goes by different names, whether its called lawsuit loans, pre-settlement loans, and legal financing, but it is characterized by advance cash that does not normally interact with the prosecution of the lawsuit.

Commercial litigation funders, also known as litigation finance, litigation funding, or commercial lawsuit funding, is an almost entirely separate industry that helps small business and individual plaintiffs by offering financing for legal costs, attorneys fees, and working capital. Commercial litigation finance is traditionally dominated by hedge funds.

Although Legalist is a commercial litigation funder, we have a special focus on small businesses and individuals. As far as lawsuit funding companies go, you should distinguish between cash advances from consumer litigation funders and long term investments in your legal fees from commercial lawsuit funders.