Claim: Attorneys do not have the authority to stop their plaintiffs from receiving litigation advances.
Claimed By: Annuity
Fact Check: Although the statement made in the Annuity.org article about how attorneys don’t have the authority to stop their clients from getting advance legal funding is technically true, it is far from being the reality.
The lack of a law to authorize attorneys to deny their clients from getting “litigation advances” does not mean attorneys are breaking the law by stopping their clients.
Still, as a side point, it is crucial to mention that most lawyers permit and facilitate their clients’ legal funding requests.
They do this by answering a few surface-level questions about the case status asked by the pre-settlement funding companies.
The questions address the relevant details to help funding companies determine the most reasonable and helpful amount of pre-settlement funds they can approve:
The following includes the typical questions companies may ask about a personal injury claim:
- Is there insurance coverage?
- Has the law firm determined the policy limits (affects how much money the client can potentially get compensated for their loss)?
- If coverage exists, has the insurance company(s) stated whether it accepts liability to financially compensate the client for their loss
- Has a settlement offer been made?
- What is the current total amount of medical bills the lawyer has collected for their clients (Generally, the higher the dollar amount of the total cost of a client’s legitimate medical treatment, the more likely the client will receive a larger settlement or court award monies)?
If not already, the above info will be disclosed to the insurance company during discovery or during mediation.
When an attorney provides these brief yet pertinent details, they make it easier for their clients to get approved for the optimal amount of funding.
Neither attorneys nor the funding companies want their clients to get “overfunded,” which means they will have received too much funding regarding the case’s estimated value and risk blowing a settlement offer.
More and more attorneys see how it can be helpful long term for their client’s recovery to get a modest amount of funding, as not only does it help their clients pay for the daily cost of living (i.e., put food on the table and not get the electricity shut off.)
It helps their clients not to pressure them to settle the case too early for an amount less than the case is truly worth.
Even though the above is not a time-intensive process and consumer legal funding is mainstream, there is a minority of attorneys who have a “no funding policy” for their firm.
That means they do not allow or make it practical for companies to provide their clients with pre-settlement funding since they are unwilling to sign an Attorney Acknowledgment that acknowledges that their client received funding and that they will hold back any case proceeds to pay the funding company what it is owed before sending the final settlement check to their client.
For instance, some mass tort law firms tell their clients they will withdraw from their cases if they apply for funding.
Typically “no funding law firms” are vocal about their policy and let the clients know that is the situation.
This transparency makes it easier and less stressful for their clients in the long run than keeping clients in the dark and staying silent about the policy by not letting them know.
Although this can be very frustrating to clients, trustworthy legal funding companies accept this as being the reality and therefore do not pressure the attorneys to make a one-time exception allowing them to fund the client.
Also, legal funders do their best to divert the attention of frustrated clients from being angry at and “blaming” the law firm.
In conclusion, although no law authorizes law firms to stop their clients from getting lawsuit funding, that does not mean it is against the law, and lawyers can stop plaintiffs from doing so.
Fact Check By: Express Legal Funding
