According to a recent survey in 2017, US companies spend 166% more money on litigation cases than their global counterparts. It is hard to avoid litigation but necessary steps can be taken to make litigation a smooth process.
Exorbitant and cumbersome litigation costs can affect businesses financially too. As small businesses don’t generate heavy profits, the outcome can be devastating. Small businesses can become insolvent. This can affect them both physically and financially.
Resorting to legal ways to compensate losses and lawsuits is the best option an organization can pursue. This is where the idea of legal funding and legal loans come from.
What is Legal Funding?
The legal profession has long ventured to entrepreneurship. The careful and nitpicky nature of lawyers have proved that they can also be successful businessmen. This branch out of the profession gave rise to the necessity and popularity of legal funding and financing.
Legal funding, per se, refers to the covering or funding of financial costs of the company by a third party. It acts as a mechanism to provide financial relief to the plaintiff, usually involved in a personal injury case, whose case is pending. It is different from the traditional loan or banking system as it is based on personal settlement.
Despite being similar to the banking loan system, legal funding is not considered the traditional way of availing of loans. Rather, it is more similar to buying assets or venture capital.
Lawsuit Funding for Your Small Business
Facing a lawsuit as a small business often leads to despair. The process is expensive enough to cost the business operations. Luckily, lawsuit funding has become the saving grace of starting businesses in these dire situations.
To make sure your business is unhazed by a lawsuit, choosing a top rated lawsuit funding company is of utmost importance. A good lawsuit funding company will not make you sign veiled documents.
They will guide you through the entire process. The last thing you want is a lawsuit company that makes false promises. Getting a lawsuit funding will be a shot in your arm during the daunting lawsuit process.
Ideal pre-settlement funding companies must also have these different types of loans.
Pre-settlement loans are also known as lawsuit advances. It is a type of loan that becomes accessible to the plaintiff or loan applicant during the pendency of their case to cover for the litigation expenses.
Litigation proceeding are costly, lengthy, hectic, and overwhelming. All the ruckus about it greatly affects small businesses financially. As such, it’s smart for smaller businesses to opt for pre-settlement loans so as to not use their capital for the litigation expenses. Thus, not affecting or limiting its effects on the business.
Pre-settlement loans are ideal for smaller-scale organizations as the approval process is faster than those of banks. The main reason behind the faster approval is that legal funding companies don’t look into business credit score. They focus on the merits of the case because they assume all the risks from you.
Car Accident Lawsuit Loans or Auto Accident Loans
According to the report by Insurance Information Institute, car accidents cause an average of 35,000 fatalities every year. Despite many safety rules and regulations, car accidents have been one of the major causes of death in the states. Car accident lawsuit loans are in high demand in the USA.
It is a type of payout based on the potential financial loss suffered by the person in the car accident. Small businesses can benefit from this loan when one of their cars get into accidents. The money can be used for repair or for the litigation process if in case they were the negligent party.
Aside from that, car accident loans also help in bearing the medical expenses. So, if there was someone who was injured during the accident, the business capital or revenue will not be used to pay for the damages.
Personal Injury Lawsuit Loans
A personal injury especially the serious one can take months to heal. Medical debts, mortgages, car payments, grocery debts, credit card debt etc, can be hard to pay off. These expenses can be really a headache. Sometimes it becomes too tough to pay all the debts and expenses.
One can use personal injury lawsuit loans in any way he or she likes. There is no bar or a specified way to use a personal injury loan. There are certain conditions for availing or opting for personal injury lawsuit loans. Small businesses may avail this option when employees get into accidents or caused injury to another individual.
Personal injury loans can cover 20% of estimated expenses. They are beneficial as well. They do not pose any threat or risk. Pre-settlement loans are often non-recourse. This is an added advantage.
Other Ways by Which Companies Should Handle Lawsuits
Aside from securing your business financially through legal funding firms during a crisis, here are other must-do methods to effectively handle lawsuits.
1. Review the Case With a Qualified Attorney
The foremost thing a company can do when they get sued by a lawsuit is to hire a qualified attorney. You need the expertise of an attorney to review the documents to understand the nitty-gritty details of the case.
With a qualified attorney on your party, you will be aware of all the dos and don’ts during the litigation process, such as the following:
- The company is required to preserve all the important data that is related to the case.
- Always remember that do not communicate directly with the other party. Anything you say or do can be used against your favor.
- Record and take care of all the important evidence that can help your case.
2. Inform the Insurance Provider of the Lawsuit
If your business is insured, make sure to inform your provider on the onset of the lawsuit. An initial discussion with your insurance provider will determine whether you need a supplementary pre-settlement loan.
Most companies don’t cover all types of lawsuits. But, if the case filed against your company is about defamatory crimes, like libel, a general liability insurance policy might cover it.
3. Strategic Planning About How to Proceed With the Lawsuit
Understanding the nature of the suit is very important. One should carefully examine the suit and then reply accordingly. Since litigation costs rise too quickly, one needs to carefully scrutinise the nature of the suit before replying. This step is very important to save unnecessary litigation costs.
4. During and After the Lawsuit Proceedings
As a small business, the most important course of action after facing a lawsuit is to bounce back. Too much time and resources were redirected into handling a case which isn’t ideal for organizations which are still building foundations.
One way to do this is to implement stricter and more stringent guidelines. Ones where loopholes are almost impossible to find. This is to protect your business from copycat suits, which are usually done by those who want to take advantage of the situation to earn settlement money from you.
Final Words on How to Handle Lawsuits for Your Small Business
Facing lawsuits head on as a small business is a risky yet bold move. It affects your business financially, and taints a growing brand. Luckily, there are already established safety measures today that will save your small business during these types of crisis.
Legal funding is a viable option for starting business to brave through arduous litigation processes without compromising the business’ finances. Aside from securing pre-settlement loans, discuss your situation with competent lawyers and carefully plan your next steps.