Frequently Asked Questions about Commercial Lawsuit Financing
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• How do I know if I qualify for commercial lawsuit financing?
• Do I have to sign a personal guarantee to receive commercial lawsuit financing?
• Do I qualify for commercial lawsuit financing even if I have outstanding business loans and other obligations?
• Will commercial lawsuit financing affect my ability to qualify for business loans in the future?
• Should I apply for commercial lawsuit financing if I can qualify for a business loan?
• How much will LawMax advance to commercial lawsuit plaintiffs?
• What is my attorney's involvement in securing financing?
• What will my accountant's involvement be in securing financing?
• What if I have additional questions?
Question: How do I know if I qualify for commercial lawsuit financing?
Answer: If you are the plaintiff in commercial litigation in one of the categories on the home page of this website, and have retained the services of an attorney on a contingency basis, you meet our two basic requirements. Beyond those two factors, a LawMax Underwriter would need to review your application for financing to provide a more specific answer.
Question: Do I have to sign a personal guarantee to receive commercial lawsuit financing?
Answer: No. Since lawsuit advances are not a lien against the assets of a business and/or its owner(s), but rather a lien against the expected outcome of the business's lawsuit, there is no need to sign a personal guarantee.
Question: Do I qualify for commercial lawsuit financing even if I have outstanding business loans and other obligations?
Answer: Yes! Although commercial lawsuit financing is often referred to as a "lawsuit loan" it is important to remember that it is not a traditional loan. It is actually a non-recourse advance against the outcome of your pending lawsuit. Many companies involved in commercial litigation are hesitant about applying for additional financing, especially if they already have current business loans or lines of credit. However, since lawsuit advances are non-recourse forms of financing, they are not granted on the basis of your ability to repay them out of your cash flow but on the expected outcome of your lawsuit. Even if you have loans you are struggling to repay, you may qualify for lawsuit financing.
Question: Will commercial lawsuit financing affect my ability to qualify for business loans in the future?
Answer: No! In fact, a commercial lawsuit advance can actually help you qualify for business financing in the future! If you are facing a cash flow crunch, and you are having trouble meeting your current obligations, the cash from lawsuit financing can be used to pay any past-due obligations. As a result, commercial lawsuit financing can actually improve your credit standing. Also, since a commercial lawsuit advance is not a traditional loan or line of credit, it does not appear on your business's credit report, and it does not have to listed as a liability on your balance sheet because it is an advance against the pending proceeds of your lawsuit, not a lien against your income or assets!
Question: Should I apply for commercial lawsuit financing if I can qualify for a business loan?
Answer: If you can repay a traditional loan from your cash flow without jeopardizing your business, you may want to do so. Traditional loans are often less expensive than non-recourse forms of financing such as commercial lawsuit financing. However, if you want to preserve your cash over the next several months, and you would prefer to repay your financing from the proceeds of your lawsuit, commercial lawsuit financing makes a lot of sense.
Question: How much will LawMax advance to commercial lawsuit plaintiffs?
Answer: There is really no limit. We advance each client as much as we believe is prudent based on their legal claim, and each request for financing is considered on a case-by-case basis. Most commercial lawsuit advances are in the $100,000 to $400,000 range, but there is no upper limit. We can advance any amount based on how much the client requests and the specifics of the client's lawsuit.
Question: What is my attorney's involvement in securing financing?
Answer: LawMax will contact your attorney to request the documentation we need to review and evaluate your request for financing. One of our Underwriters will also need to speak to your attorney about the case. If we are able to offer you financing, we will send the financing agreement to your attorney as we assume you would want him or her to review it for you. If you decide to accept commercial lawsuit financing from us, your attorney will need to acknowledge our lien against the proceeds of your lawsuit. When you win your case or settle out of court, your attorney will repay the advance plus the accumulated risk premium from his trust account when he pays any other lien holders.
Question: What will my accountant's involvement be in securing financing?
Answer: It is unlikely that your accountant would be involved at all in the process.
Question: What if I have additional questions?
Answer: Call
1-877-253-5531 or
e-mail your questions to us.
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