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Personal Injury... What is a Litigation Loan and Is It Right for You?

Personal Injury matters are often lengthy and often leave claimants in a financial bind until their claim settles, especially if that individual is off work because of their injuries. A litigation loan, also known as a lawsuit loan, is a type of pre-settlement loan or financing for claimants experiencing financial hardship, or those who require additional funding to further their legal proceedings. The loan is essentially a cash advance on settlement proceeds or court-ordered damage awards.

Alix Digout – October 2018

Is a Litigation Loan Right for You?

In Nova Scotia, most personal injury cases proceed on a contingency fee basis. This means the lawyer and client enter into a Contingency Fee Agreement where legal fees are paid based on a percentage once a successful settlement is reached, or a decision is made by the court following a trial.  Contingency Fee Agreements are an excellent access to justice tool, as they allow claimants to obtain top notch legal services without having to pay a retainer or monthly bill.  Unfortunately, these agreements do not completely lessen the financial burden faced by those injured because of another’s negligence.

Personal Injury matters are often lengthy and often leave claimants in a financial bind until their claim settles, especially if that individual is off work because of their injuries.

A litigation loan, also known as a lawsuit loan, is a pre-settlement loan or financing for claimants experiencing financial hardship, or those who require additional funding to further their legal proceedings.  The loan is essentially a cash advance on settlement proceeds or court-ordered damage awards.

For example, litigation loans can be used to fund the cost of legal disbursements, such as expert reports, necessary medical treatment, or expenses of daily living.

If you feel you need a litigation loan, it is important to discuss the effects of obtaining a litigation loan with your lawyer. Your lawyer can help you navigate the pros and cons and provide you with advice.  Here are a few things you should do before obtaining a loan:

While litigation loans can help in the interim, the lasting financial implications may be significant.  It is prudent to first explore alternate forms of funding such as an advance payment, loans from traditional financial institutions, private insurance disability benefits, EI Disability Benefits, CPP Disability Benefits, and borrowing from friends and family.

At MDW Law, we are happy to meet with you to discuss the pros and cons of obtaining a litigation loan or review the terms of a loan agreement to determine whether it is in your best interest.

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