Showing posts with label Funds. Show all posts
Showing posts with label Funds. Show all posts

Wednesday, February 13, 2013

How do Litigation Funding Companies Choose Cases?

Litigation funding has increased in popularity in recent years. Many big businesses that have chosen to take another company to court have turned to this option, as it can assist them in getting the funding that is required to sustain the case.

What is litigation funding?

It is a funding method which is also often referred to as third party funding. It can provide companies with funding for cases. Most litigation funding companies only accept cases when presented through a solicitor, which can be easy to arrange.

When businesses choose to take a claim to court but they don't have the necessary funds to do so, a litigation funding company could prove to be a viable option. The business would not need to pay anything in the first instance and would only seek to recoup the loan should the case win.

How much do litigation funding companies recoup?

This all depends on the third party funding company in question. Some ask for their initial investment back plus a Return on Investment (ROI) of around 30% of the damages that have been awarded. Others ask for the investment plus an amount equal to three times this amount as their ROI.

What kind of cases do third party funders take on?

In order to take on a case, third party funders must go through extensive due diligence procedures first.

If a case is accepted, it must:
  • Be of high value (some third party funding companies will only accept cases with a value of more than £5m)
  • Be strong enough to win
  • The defendant has to be able to pay for the case

Also, commercial law is the main sector for litigation funding at the moment, as this can provide funders with the best ROI. There is of course increased risk with funding cases which are of higher value, but the potential returns can be worth this.

At the moment, smaller cases of lesser financial merit are not taken on as there is no real market for them. However, there is some speculation over whether the recent introduction of Alternative Business Structures (ABS) could change this.

What is the future of third party funding?

Litigation funding has steadily increased in popularity over the years and has also seen success in the USA and Australia. Australia has a quite similar system to the UK’s, whereas the USA has some differences.

It is thought that, as law firms begin to familiarise themselves with the third party funding market, it will become more commonplace and an increased number of big businesses will choose to use it.

This article was provided by Aurora Johnson on behalf of Vannin Capital, a litigation funding company working within the commercial sector. You can visit to find out more.

Saturday, February 9, 2013

Selling Your Structured Settlement for Maximum Cash - An Illusion or Reality

What a Structured Settlement Is and Why Some Plaintiffs Opt to Sell Their Future Payments?

Senior couple signing financial contract
Senior couple signing financial contract (Photo credit: SalFalko)
As you probably know, people who get injured in various accidents usually receive a structured settlement. This is actually a monetary compensation paid by the insurance company in a stream of fixed installments over time. Such financial agreements typically arise as the result of a lawsuit from various personal injury cases, like traffic accidents, medical malpractice, work related injuries, wrongful death and some others. There may be also cases with no relation to personal injuries, like legal malpractice, worker's compensation, commercial cases, etc. However, in any of these circumstances the entire amount of monetary award assigned to a plaintiff is spread out over some time period and distributed in the form of monthly, quarterly or annual payments, rather than in a single lump sum.

Of course, any structured settlement owned may become an excellent source of substantial additional income. Though many structured settlement holders who face sudden life circumstances change and unforeseen financial burdens, find that they need pretty much more cash than their periodic payments provide. There is also a group of plaintiffs who consider it rather stressful and inconvenient to be tied up to the inflexible schedule of small periodic payments and, therefore, wish to unlock their future payments and get access to their legal money in full now to use it however they need: either to eliminate current financial obligations or meet some short-term or long-term goals.

For both groups of structured settlement recipients turning their future payments into a lump sum of cash is definitely the most deliberate choice. Since 1988, it has become legal to sell structured settlements, annuities, insurance policies and some other related financial agreements in US in return for a lump sum of cash. In such a way, funding companies, also known as settlement funders, have quickly emerged on the asset-backed market. They are dedicated to accomplish such transactions allowing payment recipients to gain absolute control over their finances.

The truth is that many plaintiffs hesitate to sell their structured settlements, even when facing the dire need in cash, mainly influenced by a rather widespread opinion that a settlement sale transaction may dramatically reduce their monetary reward. But what actually happens with your money when you sell your future payments to a funding company? How much is your structured settlement worth in fact? What should you do in order to get most cash for your settlement or is it still wiser to keep to the initial payment schedule with small periodic installments coming over time? Let's clean the air on these rather crucial questions for each and every plaintiff.

Roots of the Misconception

Indeed, there is a strong belief that getting maximum cash after selling a structured settlement is no more than a myth and a plaintiff would get a dramatically reduced amount of his/her money. In fact, settlement sale transactions owe their bad reputation to non-direct funders. Unfortunately, there are some funding companies on the asset-backed market that partner with intermediate brokers and use some third-party assistance.

They typically require certain fees for their services, and it is rather obvious, that every broker in this chain will cut off a piece of your monetary award. As longer this chain is, as less money you may expect to get. And like many other promises and guarantees connected with third-party companies, adequate settlement cash payouts may also turn to be just an illusion.

When Getting Maximum Cash is Real

But the situation may go the whole different way, if you are dealing with a direct funder. Established and reputable funding companies operate typically as direct funders avoiding any intermediate brokers during the whole transaction process. While applying various solid financial and legal instruments, they are able to provide plaintiffs with maximum cash advances for their structured or annuity settlements. When you hand in all related papers, their financial consultants will determine the value of your settlement and tailor a package meeting all your specific needs and goals.

It's also worth to point out that an established settlement funding company imperatively submits every single transfer agreement directly to the local court for review to ensure that the proposed cash payout option is in the best possible interest of a plaintiff and a purchasing company works in the fullest compliance with both state and federal laws.

In such a way, whether getting maximum cash for your structured settlement is an illusion or reality is the matter of your deliberate choice only. If you would like to share your personal experience of cashing out future settlement payouts, feel free to do that in the comments below.

Author's Bio

Derek Wrend is a PR manager at OzarkFunding - a settlement funding company offering the maximum lumpsum of cash for structured settlements.

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