Most people may not know about “plaintiff funding” until they find themselves in litigation, struggling to make ends meet while they await a settlement. While your world may stop due to a catastrophic accident, unfortunately the world around you will not. Bills still have to get paid, rent or mortgage must be met, food has to be put on the table, etc. But when you’re in litigation, and often out of work, it’s hard to find the resources to meet these basic needs.
Historically, the for-profit plaintiff-funding industry has taken advantage of the individuals in this exact situation. At the Bairs Foundation, we believe that funding litigants and their families is a necessary part of Americans’ access to justice.
We have paged through countless FAQ pages created by the unregulated, for-profit non-recourse lending industry. To show how our non-profit, the Bairs Foundation, is changing the model of non-recourse advances, and to make sure the public is properly educated and empowered when it comes to pre-settlement funding, we’ve started a series of our own answers.
If you have a question we have not yet addressed, feel free to post it in the comments. This post is the first in a series of blog posts about legal funding for plaintiffs.
I’m in the middle of litigation, and I’m draining my funds. Is there any way I can get some financial assistance?
When seeking financial assistance from a third party, plaintiffs generally have two borrowing options: recourse and non-recourse. These two options differ in how borrowers are obligated to pay back the money they owe.
If a person receives a recourse advance during litigation and loses his or her lawsuit and cannot pay back the debt, the company is allowed to seize that person’s assets, sue to garnish his or her wages, and otherwise file collection actions to get their money back.
If a person receives a non-recourse advance, he or she is not personally obligated to pay back the company with assets upon losing the lawsuit. In that case, the non-recourse company simply loses its money because it agreed in advance to only recover against the lawsuit.
Non-recourse advances are generally more attractive than recourse advances, because borrowers do not risk losing their property if they lose their lawsuit. However, the non-recourse industry is unregulated and can therefore charge astronomical interest rates. These staggering interest rates can end up costing a plaintiff over 100% of the amount they originally borrowed. The risk these companies take is how they often validate their high rates. However, it’s the plaintiff who is likely to suffer the financial burden in the long run.
The Bairs Foundation offers an alternative to plaintiffs that doesn’t involve staggering interest rates OR seizing assets. We provide financial assistance at the compassionate and fair rate of 7% simple interest.
What can I use the money for?
Many litigants who receive an advance during litigation use the funding to pay for basic life necessities — such as bills, groceries, and other expenses — until their lawsuit concludes and they have a chance to get back on their feet.
Can’t I just ask my attorney to fund me?
The American Bar Association (ABA) prohibits attorneys from lending money to clients for their basic needs. This rule prevents a conflict of interest in the attorney-client relationship.
How soon can I receive a non-recourse advance?
Many companies in the non-recourse industry say they can provide plaintiffs with financial assistance almost immediately — some as fast as the next day. They also offer to advance as much as possible and as frequently as plaintiffs need it. Receiving financial help right away can be a huge help right now, but there’s a long-term catch. These for-profit companies know they’ll make tons of money on the interest if they win their lawsuit.
At the Bairs Foundation, we care about the fact that any amount a person borrows will cost him or her down the road, so we take extra time to consult with families to make sure we’re giving them only what they need. While our team does take into consideration particularly urgent issues, a person could receive funds from the Foundation in about 10 to 15 business days once a request is approved.
More Questions? Ask Bairs Foundation Founder John Bair
John Bair has guided thousands of plaintiffs through the settlement process. Motivated by a desire to assist others in protecting their financial well-being, John and his wife Amy established the Bairs Foundation. At seven percent simple interest, the organization provides the financial assistance families need during litigation. Read more at http://www.bairsfoundation.org/.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).