In our last article, we discussed some of the basic business expenditures involved with providing lawsuit funding for those individuals who need cash but cannot wait until their lawsuit is settled. Costs such as salaries, IT, legal counsel, etc. are all factored into the “cost” of pre settlement cash advance funding.
While all of the above are obviously necessary components of the lawsuit loan business, one of the most important aspects of the business is the compilation and analysis of paperwork. This post will explore what we call “chasing the paper” as part of the litigation advance business.
Application – The lawsuit funding process begins with an application where the front office takes down the personal information from the applicant and some basic details about the lawsuit such as the type of lawsuit, damages, attorney info and circumstances about the case.
Request for Information – After the application is completed, a request for information is sent via fax or email to the attorney’s office. Once the requested paperwork is compiled, sent and receive, the case can be considered for funding. The vast majority of lawsuits which are advanced cash are personal injury cases. Below are the main three pieces of paperwork needed to evaluate these claims.
- Police Report/Incident Report
- Insurance Information
Analysis – The analysis of the above paperwork will allow the underwriter to assess the merits of the case and to more intelligently speak about the action when he/she ultimately has a conversation with the applicant’s attorney.
More Paper – In many instances, the documents received are simply not enough for the underwriter to make a preliminary evaluation. This may be due to oversight by the law firm or the fact that the firm does not yet possess the documents in question. In either case, administrative steps must be taken to try to secure these important papers.
Contract – Once the application for a lawsuit loan is processed, paperwork received and case underwritten and approved, the file moves into the approval department where a contract is drafted memorializing the agreement between the parties. Special care is taken to ensure the amounts, dates, captions, names, and all other material terms are correct. At that time, the lawsuit funding agreements are forwarded to the parties.
Contracts Back – After the contracts are prepared and sent, the process moves along but is by no means finished. Instead, questions frequently arise with regard to contract terms, drafting errors, amounts, or word usage. Most often these issues are resolved by the parties and their counsel. Once the funding documents are executed and received, the case is moved to its final stage – funding.
Funding – The transfer of money has never been as easy as it is today. Lawsuit funding companies use a variety of different ways to transfer money to their clients. Of course, checks are sometimes sent as in the old days, but more these legal loan outfits also utilize more modern forms of transfer such as wire transfer, direct deposit or wire houses. Since time is usually of the essence in these transactions, wiring funds is the most efficient manner or money transfer.
Post Closing – Once the case is funded and money received by the applicant, the collection/monitoring process ensues. In future posts, we will deal with this very important part of the lawsuit funding business in more detail. For purposes of this post, suffice it to say that pre-settlement loan companies have entire departments dedicated to updating and monitoring the cash advances in their portfolio.
Payment – All of the above is designed for this last phase of the lawsuit cash advance business where the money outlaid is repaid. When a lawsuit settles or otherwise comes to a conclusion, the attorney forwards the money to the pre settlement loan company The file is closed and money received and money re-deployed in search of profit.
Above we paint broad strokes as we discuss chasing the various forms of paperwork needed to facilitate a lawsuit cash advance transaction. Discussing the various steps in the process aids in the understanding of how the pre settlement loan business works. From this knowledge, applicants know exactly what to expect when seeking the relief provided by lawsuit loan companies.
Thank you for your interest in the litigation finance industry.