Following graduation from Cumberland School of Law at Samford University, Eric Stevenson held a number of positions including Assistant State Attorney in the First Judicial Circuit of Florida. Eric has been practicing with partner Christopher Klotz since 2015 litigating personal injury and car accidents in Alabama and Florida.
You’ve seen the ads promising immediate cash for your car accident or personal injury claim. Companies such as Oasis or LawCash promise that they can put money in your pocket now and that you do not have to pay them back if you do not recover. What they do not tell you is just how much that money they advance against your potential settlement will cost you.
Many of these companies charge high origination fees and collect high interest rates that are calculated monthly. At the end of the case, that $5,000.00 that you borrow because you were in desperate need of money could cost you $15,000.00. Depending on the amount of the settlement or verdict, you may not put any money in your pocket at the end of the case.
These lawsuit funding companies create serious problems for attorneys and clients. When a personal injury lawyer tries to evaluate the value of a case and discusses settlement with his or her client, the amount that the loan has ballooned into puts a strain on the relationship because a third party (the lender) has interjected itself into the case. Many times, the litigation financing companies require clients to waive attorney client privilege and ask for confidential information to approve the loan. Ultimately, the legal funding company is involved in conversations about settlement which should be a matter only between a lawyer and client, not a third party. When you add in the exorbitant rates these companies charge, it is easy to see why you should stay away from them.
Lawsuit advance firms prey on people. If a person is hurt and out of work and is having trouble paying their bills, no one else will lend them money and their case is probably the only asset they can leverage. These firms appeal to this weakness in their ads. Make no mistake though; they are in the business to make a profit.
When it comes time to pay, however, the pre settlement funding company that was so helpful in the beginning, is not so helpful when faced with the reality of the value of the claim. They rarely waive fees or interest and that compassion shown in the ads is gone. That small amount of money needed to pay some monthly bills is now not available for you to pay future medical bills.
When a personal injury client approaches me wanting to borrow money against their case, I advise against it. I have seen how these companies operate, and, no matter how bad it is, borrowing from these companies only makes it worse.