Are All Settlement Funding Providers the Same?
As a lawyer, you always have your clients’ best interests in mind. Sometimes lawyers are reluctant to recommend settlement funding because they know of unethical providers – settlement funding organizations that take advantage of desperate plaintiffs by charging unjust interest rates.
But are all providers the same?
A Primer on Settlement Funding
Let’s start with a review of how settlement funding works, in case you aren’t familiar. Though there are some variables in the process depending on the organization providing the funding and the nature of the specific case in question, most of the time, it works the same way. A plaintiff awaiting a settlement seeks settlement funding to get an advance against their future settlement. They can use the money for any expenses they want and won’t owe anything until the settlement arrives. From there, they’ll need to pay the loan back – which typically includes interest.
It’s a way for plaintiffs to relieve their financial burdens and reduce stress while waiting for their case to settle.
The Short Answer
We’ll give you the short answer upfront: not all settlement funding providers are the same. While the process will be similar between any two providers, some providers have very different methods of evaluating cases and disbursing funds. While there are certainly some unethical and predatory settlement funding providers, there are also organizations doing their best to help plaintiffs in a responsible and straightforward way.
Variables to Consider
When evaluating a settlement provider, these are some of the top ways they can differ – and some of the most important variables to consider:
- Types of cases considered. Different settlement funding providers may differ in the types of cases they consider. For example, there may be loan providers who specialize in providing funding specifically for personal injury cases. While many loan providers work on cases all over the country, some focus exclusively on one or a handful of states.
- The application process. Settlement funding providers differ in how they present the application process. No matter what, your clients will have to go through some type of process before they’re given approval for a loan. In some cases, this is a simple online application that can be filled out in a matter of minutes; from there, the organization will review the application, ask some follow-up questions of you (or your client), and push for approval based on what they find. In other cases, the process may be more time-consuming or exhaustive, unfolding over the course of multiple interviews and fact-checking sessions. While a lengthy or thorough application process shouldn’t be a dealbreaker, it may be worth considering alongside other factors.
- Customer service and communication. You’ll also need to think about the customer service and overall communication of the settlement funding provider in question. Does the team seem genuinely invested in providing positive experiences? Are they easy to get in touch with? Do they answer all your questions with honesty and transparency? Hopefully, the application and loan process will go smoothly, but if something goes wrong, you’ll be grateful to have an organization that’s easy to communicate with.
- Interest rates and fees. One of the most important variables to consider is the interest rate and/or fees charged by the settlement funding provider. Some settlement funding providers charge their clients an interest rate, much like a conventional loan, and in some cases, this interest rate begins compounding immediately. If your clients aren’t careful, a high interest rate could leave them in even more debt, threatening their financial future – all for the profitability of the organization offering the funding. But Capital Now Funding goes a different route. We transparently charge only a flat fee for our services instead of an interest rate. This means the payoff is fixed for the life of the case and can never escalate and threaten the future settlement.
- Repayment requirements. Settlement funding providers also differ in terms of their repayment requirements. In other words, under what conditions are your clients required to pay back the loan, and how are they required to pay it back? In most cases, if your client doesn’t receive a settlement, they won’t be required to pay back their settlement advance. Additionally, even if they do receive the settlement, they won’t be required to start paying back the settlement advance until that settlement arrives. Be sure to review the terms and conditions of the loan thoroughly to check for hidden fees and other requirements.
Why It Matters
So why does this all matter?
For starters, settlement funding has the power to change your clients’ lives for the better. They can get immediate access to settlement funds they’d ordinarily have to wait weeks, or even months, to receive. That means they can start paying their bills again, make up for their lost wages, and immediately feel a sense of financial and emotional relief. They’ll be less stressed, more comfortable, and healthier – allowing for a faster recovery and smoother communication.
On top of that, recommending the “right” settlement funding provider has the power to boost your reputation and your rapport with clients. Connecting your client to a settlement funding provider who has their best interests in mind will instantly build trust with your client. They may be more willing to collaborate with you and open up to you, resulting in a better lawyer-client relationship. When the case is over, they’ll feel better about it as well – which means you’ll stand to benefit from better reviews and more referrals to their friends and family members.
Of course, these benefits – both for you and for your client – are dependent on your ability to find, research, and ultimately recommend the “right” settlement funding provider. Different providers have different values and different offers, so it’s on you (and your client) to find the best possible option.
Are you looking for a settlement funding provider to recommend to your client? Or are you just curious to know more about the settlement funding process? Contact Capital Now Funding today to learn more about us – and how we can help your clients.