Alternative Litigation Funding Options

Litigation funding is a very real need if you're caught in the middle of a lawsuit and don't know how long it'll take to wrap up. Savings can tide you over for only a while and sooner or later you'll find that you're going broke.

One way to ensure you have enough money for legal fees is to apply for legal financing or litigation funding. This is where a third party loans you money that you must repay only if you win the case. If you don't, the lender is forced to lose the investment.

While this is a sure-fire way to get some much-needed money, not everyone qualifies for legal financing. If the lawsuit you've filed isn't solid (has less chance of winning) then you may not be able to get help. Or, if you don't have a lawyer to represent you the lender may turn down your application. This is because funders are taking a big risk with their money by staking it on you. If you lose, they don't get returns on their investment so they need to make sure that there's a competent professional looking out for you.

In such cases, alternative funding options must be sought and fortunately, there are several choices. Here are a few.

Loan from a friend or family member

People close to you are usually giving and have no problem loaning you money if they're flush. The advantage is that there's no interest and you can pay it back slowly. If it seems like the case is going to drag for a few months, borrowing money from a kin or a friend is a great idea as you won't be pressured to repay it too soon. If you want, you can always pay back with interest as a token of thanks.

Personal loan

A personal loan from the bank is another option although not such a sound one. It's also difficult to obtain because banks aren't too keen on investing in legal cases especially where the outcome is unpredictable. While there's a chance you may be able to get the loan, the odds are not great. Still, give it a try, you may strike lucky.

Hiring a lawyer on a contingent fee basis

Similar to what a litigation funding company does, hiring a lawyer on a contingent basis sees that the lawyer is paid only when the plaintiff wins the case. While this works out well, there are other expenses to consider such as court fees which must be paid throughout the course of the case. Moreover, the final cost to be paid to the lawyer may amount to much more than initially thought as the lawyer is taking a risk with you and your case.

These three options are workable and you have the choice of picking any one. Like legal financing, there are criteria to meet and even loans from people you know may not be the best choice. Since legal fees can be quite high, not many may be willing to lend such a large amount. Some may not even have that much in the first place. Ultimately, litigation funding companies are the best sources to turn to because they have the means and as long as the case looks to be falling in your favor, you should be able to meet the criteria.