A litigation loan occurs when a lawsuit funding company offers a cash advance against the future proceeds of the case. In other words, a plaintiff receives cash now in return for money if and when the case is successful. In this post we examine the preference among companies in the pre-settlement loan business for automobile accident cases.
By far, the majority of cases considered by lawsuit funding companies are personal injury actions. Examples of these cases are slip and fall accidents, pharmaceuticals, products liability, workers compensation, and automobile accidents. Preference to automobile cases is usually given for the following reasons:
1. Clear Liability Standards – Because drivers owe all other drivers a duty of care when operating their automobile, any breach of this duty results in a potential claim for negligence. Lawsuit funding companies prefer automobile cases because a breach of this duty is very easy to prove.
Analyzing liability in automobile accidents is fairly easy for lawsuit funding underwriters. Usually the party causing the accident is ascertained through the police report or pictures of the damaged vehicles. Funders frequently consider other evidence, such as depositions, answers to interrogatories, witness statements, and admissions.
Most jurisdictions have traffic laws and the violation of those laws can be offered as proof for negligence purposes. For example, most states have a statute which places the burden on drivers to maintain a safe distance while following vehicles traveling ahead. It stands to reason if the front of a vehicle collides with the rear of another vehicle, the first vehicle did not maintain a safe enough distance. These cases are often referred to as “rear end auto’s”. In these instances, liability is usually very clear. debt collection statute of limitations
The same reasoning can be applied to most car accidents where the collision occurred while a traffic infraction was in progress. Other examples include: speeding, left hand turns, failure to yield the right of way, stop sign cases, and traffic signal cases.
2. Ease in Assessing Damages – In most personal injury cases, damages are easily calculated. Pain and suffering and bodily injury is compensable under standard negligence law and under most insurance contracts. Specific damages such as lost wages and/or medical bills are also recoverable. Because most medical conditions can be proven through diagnostic tests, the ability of lawsuit funding underwriters to accurately assess the extent of a personal injury plaintiff’s damages is greatly increased.
One of the most often seen tests performed in connection with automobile accidents is the MRI ( Magnetic Resonance Imaging ). MRI’s are used to view injuries that are otherwise unseen through other diagnostic tests like x-rays. MRI’s often show neck/back injuries such as disc herniations and/or nerve root compression, shoulder tears, and knee injuries.
Lawsuit funding underwriters and lawyers alike use these tests to assess the extent of personal injury damages in the case. Other proof of damages include lost wage claims, out of pocket expenditures, loss of earning capacity, expert reports, and operative reports for surgery.
As a whole, physical and specific damages in the routine automobile case are much less complicated than in many other types of lawsuits. For this reason, lawsuit funding of these cases is “bread and butter” for pre-settlement loan companies.