Legal Funding Facts – Why You’re Attorney Matters
One of the interesting facts about legal funding is that a plaintiff’s financial history usually has no bearing on whether or not they can receive funding. Unless a funder is investing hundreds of thousands or millions of dollars in a case — which is almost always only in commercial legal funding cases — rarely if ever do they check a plaintiff’s credit or criminal history before funding. In fact, as we say again and again, the case is the only thing that matters when a legal funding company evaluates an funding opportunity.
Of course, “the case” isn’t always black and white. It can be hard for a third party funder to evaluate the merits of a case due to a wide variety of factors — including who the defendant is, how clear the liability is, whether either party has insurance, and more. Funders need specialized knowledge, loads of experience, and access to case documents before they can make a decision.
There’s also one more factor that some may overlook — but which legal funders value highly: the plaintiff’s attorney. In fact, an underwriter’s time is better spent looking into an attorney’s history than a plaintiff’s — for a variety of reasons. Because the attorney has a much closer view to a case than a legal funder, as a third party, could probably ever have, a lot of deference is paid to when a reputable lawyer with a good track record likes a case. Funding companies pay attention to who the lawyer is, where they went to law school, if they’ve had any disciplinary action taken against them, and more. A good lawyer with a good history is a great bonus for a legal funding application.
An underwriter’s time is better spent looking into an attorney’s history than a plaintiff’s.
What also matters a great deal to legal funding companies is an attorney’s track record with legal funding, in particular. If an attorney has successfully tried multiple funded cases, it stands to reason that the odds of his doing it again increase. Conversely, if an attorney’s funded clients have lost all or most of their cases, a funding company would have reason to take pause. Some attorneys, in fact, have such bad reputations that legal funding companies have stopped even considering their clients from funding — no matter how great a case looks on paper. As the saying goes, sometimes you’re just guilty by association.
Great attorneys with good case histories and positive prior interactions with funding companies will almost certainly be positive factors if and when their clients need legal funding. And that can definitely matter when a funder decides how much a plaintiff is approved for, and at what rate of return — or if they’re approved at all.
We often like to think of legal funding in relation to venture capital — in that just as companies often need investments to maximize their value, so too do lawsuits. We might, then, think of an attorney as the CEO of a lawsuit — the person driving the ship. As any venture capitalist will tell you, a company’s CEO matters a ton when making an investment decision — so it stands to reason that the same is true for legal funding. Your lawyer is the CEO of your lawsuit — and if you need an investment, you better hope you’ve picked a good one. “Republished with permission from Legal Funding Central“