Litigation in court is a process which requires money. A lot of expenses will be there till the case is settled. The scenario is worse in cases where personal injury is involved. You will not be in a position to pay the huge bills. So, in some cases, you may have to borrow money in advance with the expectation that the litigation result comes in your favor. Such loans are called lawsuit loans or settlement funding. You can Read more about them here.

As per http://www.nolo.com/, Lawsuit loans have got merits as well as a few demerits. Here is an analysis of the same which can help you if you are looking for such a loan.

Merits of lawsuit loan
Let’s look at the positive side first.

1. They are a real financial relief
Litigations may sometimes put you in a really bad financial crisis. When you have no other option to turn to, this money will serve as a relief. You will be able to meet some of the most necessary requirements such as medical bills, living expenses, etc.

2. You get enough time to settle your lawsuit
If you are in urgent need for money, you may have to settle for less. You may not be able to negotiate well with the defendant. But if you have lawsuit loans as a backup, you have enough time to wait for a good result. If the settlement offered by the defendant is not a decent one, you can also go for trial if you have enough financial backup which the loan provides.

Demerits of lawsuit loan
Though lawsuit cash advances can be helpful, they are not fully free from negatives.

1. They are costly
The interest rate is very high. You may have to pay back an amount which is twice or thrice the amount you borrowed. If the case takes more time to settle, the interest also accumulates. You will not have to pay back more than what the settlement gives you.

So it is always better to try out other alternatives like a loan from friends or relatives, disability payments, insurance, etc.

2. Getting a lawsuit loan is not easy
Lawsuit companies select their cases very carefully. They will take your case only when they are confident that you will win. This is because if you lose the suit, you are not required to pay the borrowed money back. So the lenders always try to avoid risks. As a result, you may have to apply to six to seven companies before you finally get one lender.

3. No strict government regulations
Lawsuit loans are not strictly regulated by the government. A very few rules are there for the service charges and interests but nothing when compared to other lending services. This makes such loans riskier.

4. Finding a genuine lender is difficult
Not all companies deal with their customers decently. Look for the reputation, previous history, etc. of the lender before approaching them. Go for the one which has best reviews on customer relationship.

So while going for a lawsuit loan, ponder over all the pros and cons and make the decision wisely.