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“Legal Bucks: A North Carolina Lawyer’s Perspective on Pre-Settlement Funding”

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A North Carolina law group I’m well-networked with, Felton Banks PLLC, recently wrote an article on “Legal Bucks,” where they discuss one of the few court rulings that have been made in the state pertaining to pre-settlement funding, the Odell v. Legal Bucks case, and what their take is on legal funding.

Their intro to the article got me thinking a lot about legal funding at large, and it pretty accurately sets the stage for how most state law systems have ruled when it comes to pre-settlement legal funding:

  • Pre-settlement funding isn’t illegal in North Carolina, but it’s gotten a definitive side-eye from the state’s courts over the years. Why is the skepticism, and it a good idea for injured claimants?

I couldn’t agree more. Legal funding has most certainly gotten the side-eye from the court systems, with Georgia also ruling that plaintiffs cannot sell portions of their claims.

What I like most about the article – which can be viewed in full here – is how it approaches legal funding from a precedent standpoint. Nothing about pre-settlement funding is illegal – when it is executed correctly. Unfortunately, like any other industry, it’s the businesses that are running “side-eye”-esque operations that get the headlines though.

Here are a few excerpts from the article I liked the most, which accurately represent the legal funding industry from a lawyer’s point-of-view:

  • Consistently, the hardest thing about my practice…is money.

    As a litigator practicing mostly personal injury, cash is an ongoing thorn in my side for two reasons. First, litigation is spectacularly expensive. You’re paying filing fees, court reporters, document review staff, expert witnesses, couriers, postage, copying costs, and a host of other costs. It’s not at all uncommon to see litigation expenses for a single trial climb into the tens of thousands of dollars. The second, and more troubling, the reason is that many clients come to me in a financially difficult position. Think about it; the person in my office, having just been involved in an accident, is some combination of the following: (i) without a car, (ii) injured, (iii) in urgent need of expensive medical care, (iv) unable to work, (v) unable to care for his or her family, and (vi) helplessly watching the medical bills pile up. When this happens, the client is in serious financial trouble; expenses are significantly higher than normal, and cash flow is substantially lower.

    So what can we do about the need for money in situations like these? One option is what we refer to as “pre-settlement financing.”

  • Pre-settlement financing can have some very strong, and very obvious, benefits. The biggest one is that the client can get some much-needed relief, allowing him or her to pay living expenses and medical bills while waiting for the check to come in. Another biggie is that the client can often use the financed funds to pay for medical care that might otherwise have been prohibitively expensive. This helps the client get healthier faster, but it also does wonders for the client’s case for recovery. Finally, from the lawyer’s perspective, cash in hand can enable the attorney to hire the best possible experts, explore opportunities for recovery as thoroughly as possible, and otherwise prosecute the case with maximum effectiveness.
     
  • [Pre-settlement funding] is legal and ethical…it has the potential to help both attorneys and their clients, and in extreme cases, it could even save lives.

As a full-service direct legal and medical funding company, we have provided funds to tens of thousands of plaintiffs. And in every single case, I am always astonished by the ruthlessness of big insurance companies and other enterprises that belittle plaintiffs and their accidents by offering sub-par settlements that barely cover the medical expenses these people have endured. For most plaintiffs, it is a matter of their livelihoods, but for others, it is a matter of life or death. These cases can drag on for years – especially when the defendants at the adjacent desk are big name brand insurance companies – and the fact of the matter is that most Americans cannot afford to fight that kind of legal battle for that long without some sort of funding. So until that happens, not only is pre-settlement funding legal and ethical, it is paramount to preserving everyone’s right to the access to the court system (their Seventh Amendment right).

To read the full Felton Banks article, including additional precedents being set in North Carolina on pre-settlement funding, go to: Legal Bucks: Pre-Settlement Funding, From A Lawyer’s Perspective.

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