Frequently Asked Questions about Commercial Litigation Financing
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• Will I qualify for commercial litigation financing even if I have outstanding obligations?
• Could commercial litigation financing affect my ability to qualify for business loans in the future?
• Should I apply for commercial litigation financing even though I qualify for a business loan?
• How do I know if I qualify for commercial litigation financing?
• How much will LawMax advance to commercial litigation plaintiffs?
• Do I have to sign a personal guarantee to receive commercial litigation financing?
• 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: Will I qualify for commercial litigation financing even if I have outstanding obligations?
Answer: Although commercial litigation financing is often referred to as a "litigation 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 litigation. Many companies involved in commercial litigation are hesitant about applying for additional financing, especially if they already have outstanding business loans or lines of credit. However, since litigation 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 litigation. Even if you have loans you are struggling to repay, you may qualify for litigation financing.
Question: Could commercial litigation financing affect my ability to qualify for business loans in the future?
Answer: Definitely not! In fact, a commercial litigation financing advance may actually help you qualify for financing in the future! If you are facing a cash flow pinch, and you are having trouble meeting your current obligations, the cash from litigation financing can be used to catch up on past-due obligations. In that way, commercial litigation financing can actually improve your credit standing. Also, since a commercial litigation advance is not a traditional loan or line of credit, it does not appear on your business's credit report, and it should not be included as a liability on your balance sheet because it is a lien against the pending proceeds of your litigation, not a lien against your income or assets!
Question: Should I apply for commercial litigation financing even though I 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 litigation 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 litigation, commercial litigation financing makes a lot of sense.
Question: How do I know if I qualify for commercial litigation 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: How much will LawMax advance to commercial litigation 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 litigation 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 litigation.
Question: Do I have to sign a personal guarantee to receive commercial litigation financing?
Answer: No. Since litigation 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 litigation, there is no need to sign a personal guarantee.
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 litigation financing from us, your attorney will need to acknowledge our lien against the proceeds of your litigation. 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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