What Is Lawsuit?


A lawsuit, according to Webster’s Dictionary, is “a private legal proceeding, usually between individuals, arising out of some harm or violation of public or private law.” Therefore, a lawsuit is literally a legal proceeding in the legal court of law against another. The archaic term, “lawsuit,” is only found in a very few laws still in force today. Today, a lawsuit can be a private action taken by an individual against another person or business entity. Some states also have additional requirements for the filing of a lawsuit.

A pre-settlement arrangement is also referred to as a “re-litigation.” In this agreement, the plaintiff (the person filing suit) and defendant (the company that is being sued) reach an agreement whereby the plaintiff will pay the defendant a sum of money in exchange for the dismissal of the case. Often, a pre-settlement arrangement can save both sides money and time. Additionally, a lawsuit funding company may provide critical services such as negotiating a reasonable settlement price. (For more information on these services, see the resource box at the end of this article.)

In many instances, plaintiffs who file a wrongful death lawsuit are not able to receive the same level of compensation as those who win their cases in court. However, many state courts are beginning to recognize that the existence of pre-settlement funding may help plaintiffs receive an adequate settlement. For example, in some states, financial experts have suggested that a plaintiff should seek either a lawsuit loan from a pre-settlement firm or settlement loans from a lawsuit funding company prior to filing his or her lawsuit. This strategy allows the plaintiff to obtain the expertise needed to negotiate a fair settlement. (To learn more about obtaining either of these types of funding, see the resource box at the end of this article.)

Private investors may offer lawsuit funding to plaintiffs. (filings in California, for example, reveal that nine out of every ten dollars awarded in personal injury claims through a non-recourse basis comes from “investors” – that is, investors who have made contributions to a lawsuit funding company.) Many private equity firms invest a portion of their own assets in litigation funding. (filings in California also indicate that a growing number of real estate investors are taking advantage of this fact.) A growing number of state supreme courts are recognizing this trend and may soon require private institutions that give lawsuit loans or settlement loans to disclose their investment status.

Not all “investors” are willing to take a chance on a lawsuit. In order to obtain pre-settlement funding, a plaintiff must have a well-developed litigation plan. Unfortunately, many plaintiffs simply don’t have the time necessary to prepare a convincing case. Therefore, litigation funding companies often retain the services of experienced professionals such as attorneys who have experience winning cases and have a well developed case.

What is the lawsuit and pre-settlement funding? The terms “judicial bypass” and “settlement financing” may seem to be similar, but they are not. While both are used interchangeably, they are two different ways of saying that money can be obtained for a lawsuit but cannot be obtained through a loan or other outside financing source.

Plaintiffs need to beware of some “pre-settlement funding” companies. Although it is not illegal, it can be misleading and deceptive. Some “plaintiff funding” companies will claim to be able to finance a lawsuit if a plaintiff does not meet their qualifications. However, those companies do not offer lawsuit funding and cannot guarantee any sort of settlement.

What is the lawsuit and pre-settlement funding? Lawsuit loans are available to people who file personal injury lawsuits. If you have been injured in an accident and are in need of money to cover your medical bills and other expenses, you may wish to speak with an attorney who deals primarily with personal injury law. This type of lawyer can assist you in finding the right pre-settlement funding sources and can provide information on the process of obtaining lawsuit loans.