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Lawsuit Loans: Lifesaver or a Total Scam? – Part 2

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Litigation Funding and Lawsuit Loans: An Important Resource, or a Total Scam? – Part 2 

This article is part 2 of our series on litigation financing and lawsuit loans. We hope that this material is helpful to you in understanding the pros and cons of these loans if you are considering obtaining one in your Bronx personal injury lawsuit.

What are the Possible Benefits of a “Lawsuit Loan”?

The benefits of a “lawsuit loan” are, primarily, that the injured person and their family can obtain much-needed cash to pay for important living expenses if they are disabled from working due to injury. These loans allow an injured person immediate access to money that is rightfully theirs, but which may otherwise take many years to be repaid to them through a settlement or a judgment. Even in cases in which an injured person may be entitled to receive other benefits such as workers’ compensation or disability benefits that involve cash payments to compensate for lost wages incurred because of injury, such benefits often do not compensate an injured person for the full amount of their lost wages or employee benefits; these loans can help make up the difference between the injured person’s pre-injury wages and benefits and whatever is provided to them by workers’ compensation or disability insurance programs.

Because they can help an injured person sustain their standard of living while a personal injury or medical malpractice case is pending, these loans can also allow a person to reject low settlement offers and allow their lawyer to fight their case to the end to make sure that they receive the full compensation that they deserve, whether in a settlement or a judgment rendered in court. Insurance companies who represent defendants know that injured people cannot always wait for a higher settlement, let alone wait the many years that it takes to obtain a jury verdict and see the appeals process through to its conclusion; so they will attempt to bait an injured person, who is desperate for money because they cannot work, to accept a low-ball settlement. “Lawsuit loans” can help a plaintiff fend off these tempting, but predatory, low settlement offers and hold out for a settlement or final judgment that will fully compensate them for their injuries and disability.

What are the Potential Problems with “Lawsuit Loans”?

The most common problem with “lawsuit loans” is tied to the astronomical interest rates that are charged, which cause the repayment amount of the loans to balloon and consume large percentages of the total recovery of a personal injury or medical malpractice lawsuit. This problem is especially prevalent in cases in which there is limited insurance coverage from which a settlement or judgment can be paid because, although there is only a fixed amount of money that can ever be collected in most cases where insurance coverage is limited, there is no guaranty that such cases will be resolved quickly and the interest on the loans continues to accrue – and the repayment amount of the loan continues to grow at an exponential rate – no matter how long the case takes to come to a conclusion.

In such a case, when it comes time to finally settle, or when judgment is finally entered, the repayment amount of the loan may consume most or all of the amount of money that the plaintiff is entitled to from the case, leaving the plaintiff empty-handed (aside from the money originally advanced to them through the “lawsuit loan”) when all is said and done. This can make even complicated and difficult cases (wherein lawyers would otherwise advise their clients to accept a smaller settlement to mitigate the risk of losing the entire case at trial) impossible to settle, as the loan company wants to be repaid, but the injured plaintiff also wants some money in their pocket as compensation for their injuries.   These loans can force trials in cases that should be settled, and can result in everybody – the injured client, the lawyer and the loan company – losing everything in a case.

In situations like these, lawyers must aggressively negotiate with the loan companies to ensure that their clients, and not just the loan company, benefits from a settlement, which can be very difficult or impossible to do if the loan company is unwilling to reduce its claims to interest and fees. These situations cause grave problems not only for injured clients, but also for their lawyers; and can create conflicts of interest that can distort the attorney-client relationship by creating incentives for lawyers to be concerned more with obtaining their own legal fees than with ensuring that their clients obtain the maximum compensation to which they are entitled. To avoid these situations, it is incumbent upon the lawyers to properly advise their clients as to the limits of “lawsuit loans”, and also to ensure that they only do business with loan companies with which they are familiar and that are willing to provide relatively-reasonable interest rates and terms, and that are willing to negotiate for the benefit of all involved if circumstances require it.

So, are “Lawsuit Loans” a Scam or an Important Resource for Injured Clients?

The answer to this question is, as with most things in life, dependent upon the circumstances. To say that “lawsuit loans” are a scam, wholesale, fails to recognize the benefits that they can provide to injured people who have been disabled from working. While there are pitfalls to these loans, skilled personal injury lawyers with experience in setting up loan agreements for their injured clients can make sure that “lawsuit loans” work for the benefit of their clients, rather than as a hindrance to success. All in all, these loans are an important resource if used judiciously and effectively, with all of the risks considered and properly explained to the client. Lawyers must counsel their clients not to use these “lawsuit loans” to line their pockets with extra money to be spent frivolously, but only to use such funds if absolutely necessary to pay for essential living expenses, child care and other such necessary and important things.

If you need money while your Bronx accident lawsuit or medical malpractice case is pending, contact our team of Bronx accident lawyers to discuss whether a lawsuit loan is right for you. We will explain the risks and benefits to your Bronx personal injury case and make sure that you understand the terms of any lawsuit loan that another Bronx accident lawyer may have obtained for you. Contact our expert Bronx medical malpractice and personal injury lawyers at (718) 354-8000 for a free consultation today.

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Eric JonesEric Jones
22:43 22 Mar 23
Jesse Minc is the best personal injury law attorney I have ever worked with. From our first meeting, he explained everything to me in terms I could easily understand and was always very responsive when I had questions outside of our meetings. Jesse Minc exceeded all of my expectations. Once the case settled I was very very happy and surprised at the settlement amount Jesse was able to get for me. I can now live knowing my future is set.If anyone is looking for a great, smart, knowledgeable attorney please go to Jesse Minc
Sarah WeissSarah Weiss
13:52 17 Mar 22
I can't recommend Jesse enough. He made a difficult process so seamless. He was extremely caring, knowledgeable, diligent and forthcoming throughout this journey for me. I will be recommending him to all my friends and family if they are ever in need.
Chloe HarligChloe Harlig
22:05 16 Sep 21
You never imagine that you'll need to find a personal injury attorney – there are so many options out there and the process can be overwhelming. Jesse was the obvious choice for me as he approaches every situation with empathy, optimism, and reassurance. His clear communication style made me feel knowledge about the process and his perseverance resulted in a successful case. I can't recommend Jesse enough and while I hope I'll never need his services again, he's the only person I'll recommend to friends and family.
Xavier BasabeXavier Basabe
23:36 11 Jun 20
When you are in financial distress and physical pain it is difficult to think clearly and make good decisions . That, in addition to not understanding a legal process complicates matters even more. Jesse Minc explained the law, outlined in clear language the steps in the process that where needed to be done. He was reassuring, articulate, knowable and effective. Jesse made the process so much easier and gave me peace of mind in a stressful time. Jesse Minc and his firm tried my case to a verdict and negotiated a successful settlement for me and my wife. He is “The best of the best.” I am grateful to him and his father Dan for all they did.
alex malex m
01:36 16 Jan 19
Excellent lawyers they helped me alot with my case i really recommend this firm. Thanks to Jessy minc and his team for helping me.
Donna SantiagoDonna Santiago
17:29 20 Dec 17
Jesse Minc is a wonderful and professional attorney who does outstanding work. Jesse worked with me in the beginning of my case which I won and also finished my case which I won. I can’t be happier to have had him because he knows his job well. He goes above and beyond for you and I couldn’t be happier. Jesse I just want to say thank you so much for all your hard work and getting me the money I deserve. I will highly recommend you to anyone who needs an attorney. Thank you once again.
WENDY IlboudoWENDY Ilboudo
14:12 01 Jun 17
Jesse Minc is very professional and trustworthy. I met few bad lawyers before getting to know him and I wish I have known him before. Jesse went above and beyond to fight for me, and I highly recommend him. As a nurse and a professional in human, I will tell you that Jesse has a strong and one personality, he cares for his clients. If you give him your case, he will make it his. He will communicate with you and keep you updated at all times. His good communication skills add a lot of values to his professionalism, and that makes him the best lawyer in New York. I will always go back to Jesse. Thank you so much because you replace my tears into joy and put back a smile on my lips and face.Jessy is #1.Because of you I'm happy again. God bless Jesse Mink.
Eric LeventhalEric Leventhal
16:19 15 Jun 16
Although Jesse Minc has never personally assisted me as my attorney, I have known Jesse Minc professionally for several years and would strongly recommend him to anyone whose fortunes have sadly left them in need of a principled, zealous personal injury or medical malpractice attorney. Jesse is honest, warm, kind and open-minded, and it's easy to see why so many clients place their trust in him. As a courtroom advocate, Jesse is confident, sincere and persuasive, and a true warrior for legal justice. I hope I never need to use him, but if I ever do, I'm certain Jesse Minc would be my pick.
Adam GreensteinAdam Greenstein
13:35 15 Jun 16
Simpy put, Jesse is a an amazing lawyer, and I am very grateful to have met him. He will do everything within his power to advocate on your behalf. I was impressed by how thorough and responsive he was throughout my case. He helped explained everything to me, he was patient, and he truly cared. I would recommend Mr. Minc to anybody who needs a personal injury lawyer.
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