Third-party litigation is when a third-party funder invests money into a lawsuit between two parties in exchange for a certain percentage of the claim amount. Third-party litigation is also known as third-party funding, litigation funding, or legal financing.
Through third-party litigation, someone can bring a case without having to pay for it—either because they don’t want to make the financial risk or aren’t able to pay for it. The funder covers all or some the party’s legal fees and is in turn entitled to part of the settlement or judgment that results if the case is successful. If the lawsuit is not successful, then the person funding it will bear some of those costs.
The person seeking funding through a third-party company could be the victim in a car accident case, a law firm, or a huge company suing another company.
What Are the Benefits of Third Party Litigation?
If you are wanting to file a lawsuit for a personal injury claim, getting financial support from a third party can help you by:
- Managing the financial risk that comes with the process
- Transferring part of all of the costs associated with pursuing a claim to your third-party funder
- Allowing you to possibly pursue certain claims you would otherwise lack money or other resources to seek, although you to seek full justice for the damages caused by someone else’s negligence
After a personal injury accident, the victim is often left heavily burdened by their medical bills, repair costs, and other damages associated with their injuries and the accident. Cash advancements from funding companies exist to help disadvantaged victims who can’t cover the costs of bringing a lawsuit.
Third-party funding, which is typically given as a lump sum of cash, is not the same as taking a loan for your lawsuit, so you are not technically indebted to the funded if the case isn’t successful. Therefore, the funding does not affect your credit score and is not reported to the credit bureau.
Who Is Eligible for Third-party Litigation Funding?
Since providing funding for a case involves at least some degree of risk, a third-party funder has the right to choose who exactly they offer money to. Most litigation finance companies will, therefore, do lots of research into anyone who is seeking funding for their case. They will look at factors like:
- Chances of your case being successful and the expected size of the settlement
- Your lawyer and their amount of experience in the type of case you’re bringing
- The defendant in the case and their level of defense, including whether they can afford the settlement amount
- The type of case and amount of damages you can recover
- Your personal background
Discuss Your Case Options with a Personal Injury Lawyer for Free
There are many factors to consider when pursuing financial recovery for personal injuries. If you were hurt by the negligence of someone else and are wondering where to turn next, our attorneys at John Foy & Associates can help. We’ll offer you a FREE consultation where we can discuss your options and concerns. To get your free legal consultation as soon as possible, call us today at 404-400-4000, or fill out the form to the right.