Lawsuit loan is a type of advance being given by the loan provider to the client pending a law suit in a court .These providers allow the loan which as generally 10% to 25% less than the actual law suit. These Law suit loans are not a traditional loan because here the history of employment, income amount, credit worthiness etc. are not taken into consideration as happens in the traditional loan.
These law suit loans have a peculiar feature that if the client do not win the law suit then he has not to pay anything to the provider of the loan. Therefore, only a very strong case with fool proof strong evidences are entertained by the loan provider, there is a written agreement between the loan provider and the attorney of the client about the repayment of the lawsuit loans, wherein the method of dispersing of the fund is decided when the case is ended.
Under American law the Bar Council prohibits the attorneys to lend money to the clients under law suit loan because there may by undue influence on clients by the attorneys to settle the case for a lower amount than what he really want.
The law suit providers generally do not charge any fee at the time of application. But the client has to pay to his attorney for consultation with provider of such loan regarding its status and merits. Privacy is strictly maintained between them and relevant topics are discussed between the provider and the attorney with their clients only settlement loan is also a law suit loan, It is a non-resource loam, as such this type of loan is treated as a secured loan that always stands as collateral to the main lawsuit. This is the reason that the loan provider applies the rule of maintaining a margin of 25% of original lawsuit while agreeing for such loan to the clients.