When you have several cases pending, it can become a challenge to keep up with the details of every client. However, when it comes to cash advances from a lawsuit funding companies, you will do yourself and your clients a favor by making sure they are fully informed, and by helping them sort through the details.
1. Informing Your Client
Before they decide to seek funding, your clients should be fully informed about the pros and cons of getting a lawsuit cash advance. Some things you need to let them know in advance include:
- A lawsuit loan should only be considered as a last resort: Interest rates can be high compared to using credit cards or borrowing from family. On the other hand, if your client does not win their case, they are not liable to repay the loan.
- Don’t ask for more than you need to get by: Clients should be conservative when asking for lawsuit funding, basing the borrowed amount on how much they need to stay afloat. They can always ask for additional funds later if needed, but being conservative will save them money in the long run.
- Terms should be settled before documents are signed: A reputable lender will fully disclose their rates and fees prior to asking your client to submit documents.
2. Communicating With Funders
- Call ahead: You can save yourself a lot of time and paperwork if you call the funder ahead of time to find out if your client’s case is eligible for funding. Some circumstances may disqualify your client from funding, like low insurance coverage, soft tissue injuries, your client’s state of residence or the case’s stage of litigation.
- Send only relevant documents: This is another area where you can save yourself some time and work. Documents on liability, serious damages, insurance coverage and medical summary pages should be included. However, you don’t need to send copies of entire case files. Retain copies of what was sent in a separate file, so you can resend them to other funders if necessary.
3. Clarifying Fees and Interest
- Fees: Make sure your client understands how fees and interest will affect their settlement. Total fees should be less that 15% of the borrowed amount. Be on the lookout for hidden broker or origination fees.
- Interest: Explain to your client the difference between simple and compound interest. Compound rates may look good in the short run, but they can add up to a substantially higher payoff amount once the case settles.
- Payoff terms: Have your client ask the lender for a detailed payoff table with at least three years of data so they understand what the loan may cost them in the long run.
4. Maintaining Confidentiality
- Confirm client approval: Before you send documents about your client’s case to lending companies, make sure they are in agreement, and that they understand the potential repercussions of sharing private information.
- Distinguish brokers from independent companies: Sending confidential documents to a broker may result in them being shared with multiple loan providers, compromising your client’s privacy.
- Get a signed HIPPA release: Before sharing medical information, be sure to have your client sign a HIPPA agreement, releasing personal information to the lender.
Working With Cronus
As a busy paralegal, you want to avoid headaches caused by brokers and disreputable companies who pressure or deliberately mislead your clients. At Cronus, we pride ourselves on transparency and outstanding customer service. You can feel confident referring your clients to us, knowing they will be treated fairly by our friendly staff.