Litigation financing has been around for decades. However, it is more pervasive in recent economic times. What is litigation financing? It's when lenders provide upfront loans to claimants in exchange for an interest in the outcome of their claim or litigation.
Claimants who need money before their claims can be resolved often fall prey to these lenders. They often charge exorbitant interest and fees that can make claim resolution more difficult the longer that litigation goes on. The loans are non-recourse, meaning that if the claimant recovers nothing, they owe nothing.
The non-recourse nature means that these lenders are going to be sure their gamble is a good one. Because of that, the applications for these loans contain numerous questions regarding liability and damages. Lenders will also continue to investigate their investments by talking to claimants, their attorneys, witnesses, as well as reviewing medical records.
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