Important Questions to Ask a Lawsuit Settlement Advance Provider
As a lawyer, one of the best ways to provide support to your clients is to recommend a lawsuit settlement advance provider. But before you decide on a referral, you’ll need to do your homework – and make sure your provider of choice is worth recommending.
A Primer on Lawsuit Settlement Advances
In case you aren’t familiar, lawsuit settlement advances function like a type of loan. Your client will apply for a settlement advance, and (pending approval) be granted a fixed amount of capital – which they can then use to pay bills, manage expenses, and otherwise use as they see fit.
When the settlement comes in, your client will be responsible for paying back the loan, along with a fixed fee or an interest rate (depending on the provider). If no settlement is awarded, your client shouldn’t owe anything.
The short-term influx of cash can relieve stress, help your client find stability, and give them confidence that the case is a winner.
The Importance of Due Diligence
You shouldn’t recommend a lawsuit settlement advance provider casually or arbitrarily – I REPEAT – you shouldn’t recommend a lawsuit settlement advance provider casually or arbitrarily. This provider will have a significant impact on the amount of money your client receives, the convenience of the process, and how they feel at the end of your arrangement. In other words, your recommendation decision will impact your client’s finances and wellbeing.
Because of that, your recommendation will also impact your own reputation. If you recommend a solid, trustworthy, and fair provider, it’s going to reflect well on you. If you recommend a provider that’s questionable or disreputable, it might hurt your reputation.
As you build a relationship with a provider, you’ll become more confident in their abilities – or you’ll know when to terminate the relationship. But in the earliest days of development, the only real tool you’ll have at your disposal is due diligence. Asking questions is the best way to find out what type of provider this is – and the following are some of the best questions to ask. Pay attention not only to the answers but also the disposition and communication of the person answering them.
What Cases Are You Willing to Fund?
Different settlement advance providers are willing to fund different types of cases. Some specialize in personal injury cases, while others offer settlement advances for a wide range of different cases. Additionally, different providers have different criteria for what types of clients they’re willing to fund. They may only provide advances to cases that have a high likelihood of winning a settlement, or they may favor cases represented by more experienced lawyers. This will help you determine whether the provider is a good fit for your firm and your clients.
What Rates Do You Charge?
One of the most important questions to ask is about rates. There aren’t any major settlement advance providers that offer settlement advances for free; all of them have some way to charge for the service of providing the loan.
For most settlement advance providers, the fee comes in the form of an interest rate. Your clients will owe compounding interest on the principal they borrow. As you can probably guess, this is often problematic. If your client receives and advance early in the case and the case takes more than a few months to settle, the accrued interest can become unbearable quickly and result in a buildup of a ton of debt – ultimately putting your clients future settlement in jeopardy.
Thankfully, Capital Now Funding provides all our settlement advances for a fixed fee and we never charge interest. This allows us to be 100% transparent and tell you and your client what the payoff is the day they receive the advance and it never changes. This fee comes due when the settlement arrives – and it’s the only fee your clients will be responsible for.
We believe a fixed fee settlement advance is better for your clients because it eliminates uncertainty and removes the risk of the payoff increasing.
When and How Do You Require Repayment?
You’ll also want to ask about the repayment requirements. For starters, if your client doesn’t win a settlement, will they have to pay back the loan? With most reputable providers, repayment is only due if a settlement is won. Just remember if interest is accruing, the payoff is continuing to go up until the day the loan is repaid.
What’s the Application Process Like?
Ask about the application process. Initially, this is usually simple. Your client will be responsible for filling out a form with some basic information, including their name, address, and law firm of record. But what happens then? How is the application processed and how quickly will a decision be made?
How Quickly Can You Disburse Funds?
If and when the application is approved, how quickly can the provider get funds to your client? In some cases, you can expect funds to hit your client’s bank account in mere hours. Other times, it can take days. Generally, the sooner the better.
What Are Your Other Terms and Conditions?
Take the time to review the other terms and conditions of the settlement advance. What kinds of things are required of your clients? Are there any troubling requirements or details of the agreement that your clients might not appreciate?
What Reviews and Testimonials Can I Read?
Most reputable lenders will have a series of reviews and testimonials you can peruse to find out more about this company. Are people generally satisfied with the service they’ve received? Are there any points of concern that seem frequently brought up?
What Else Should My Clients Know?
Finally, ask a generic question to figure out if there’s anything else you’re missing. A reliable funding provider will work with you to give you all the information and insight you need to make a confident recommendation.
Are you ready to start asking these and other questions? Or are you ready to choose a lawsuit settlement advance provider that can help your clients in multiple ways? Contact Capital Now Funding for more information or to get started.