Pre-Settlement & Post-Settlement Funding

by : Ivanovich Cuxev

Pre and post settlement funding are taken in consideration during and after legal activities or litigations. Most of the time these litigations are health related or based on lawsuits for similar purposes. Just like these two terms imply Pre-Settlement transactions are effective before a decision is reached as far as the verdict concerns, while Post-Settlement transactions are processed after a verdict has been reached.

Having in mind the basic requirements each procedure involves we can infer that post-settlement transactions are much easier to execute due to the fact that the final verdict has been reached. These transactions are made to fund a litigation process providing the means for lawyers and clients to financially survive during a legal procedure.

Institutions tend to charge different fees or rates for each type of funding due to the fact that pre settlement transactions represent an increased risk factor because the results of the litigation are not yet known. Having this condition in mind we can also establish that pre settlement funding entails higher fees due to risk factors. If an injured person is not successful during the litigation the pre-settlement funding doesn't have to be repaid in full, instead the client only has to pay the amount of the share of the settlement if it is smaller than anticipated.

Another key difference between pre and post settlement procedures is that post settlement funding does not affect special incentives established during litigation. This also represents one of the advantages of one type of funding over the other. Also, pre-settlement funding is somewhat restricted compared to post settlement funding where the money can be utilized "at will" by the plaintiff.

Post settlement funding transactions are legal throughout all states while pre settlement funding is not legal in some states. Post settlement procedures are convenient to both attorneys and clients because it provides the means to solve legal and financial issues and also allows clients to pay medical bills diminishing the effect of such debts.

The truth of the matter is that a considerable amount of resources are needed during legal procedures which take months or even years to reach a conclusion. Not having the financial means to cover attorney and client expenses will definitively truncate the possibilities to reach a favorable decision. Insurance companies and institutions can take on case and reach an unfavorable settlement (to the client) because fighting a case for months at a time is out of the question for most people who don't know the options available to deal with such instances.

Make sure to go through the details of each transaction with your attorney and company which is going to fund the legal procedure to avoid unexpected situations.