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Will You Lend Me Money?

If you have experienced an injury due to someone else’s negligence, the stress of dealing with finances can make the situation all the more difficult. It may even cause you to approach your lawyer for a loan to help with your personal injury case, and you will be happy to know that you can hire a New York personal injury lawyer for your case with no up-front payment. 

While plaintiff personal injury law firms can and do work tirelessly without payment until the conclusion of the case and are paid only if there is a successful outcome, as discussed below, law firms are not allowed to advance loans to clients. Any lawyer or law firm that does so is committing an impermissible act, prohibited by the rules that govern attorney conduct in New York State.

Contingency Fees

In New York personal injury firms, lawyers who offer plaintiff-side legal representation make it easier for victims to fight for compensation. These lawyers work for a contingency fee that allows clients to pay nothing up front. After the settlement, they take a predetermined percentage from the compensation amount. However, this fee is contingent on the lawyer achieving a positive outcome.

For example, if the lawyer wins a money recovery for the client a fee equal to one third (33.3 percent) of the settlement, verdict or award is due to the plaintiff’s lawyer. If the lawyer, for whatever reason, is unable to win a money recovery for the client, then no fee is owed. In such a case, the client does not have to pay anything at all to the lawyer, ever. 

No Money Up-Front

Since lawyers work for a contingency fee, they do not require any money up-front. Although it is important to remember that every case is unique and lawyers can never guarantee a positive outcome, an experienced and dedicated firm with integrity will fight vehemently to win.

In addition to a strong spirit of professionalism as well as commitment to the client and to the ideals of justice, the firm is also motivated to win from a business perspective, as their compensation hinges on winning the case. In this way, the contingency fee of personal injury law reinforces a client’s confidence that he or she and their lawyer are united in interest. Both client and lawyer want the best possible outcome, which means the greatest possible money recovery.

Cost of New York Personal Injury Cases

When a victim hires a lawyer to fight for compensation on a contingency basis, there are various costs that arise during the case.

These costs include:

  • Police reports
  • Medical records
  • Filing fees
  • Expert witness fees
  • Trial exhibits
  • Investigators

The client will not have to advance any of these costs.  There are no out-of-pocket charges to the client. These costs, like the legal fee, are due only if and when the lawyer produces a successful case outcome by winning a money recovery for the client.

Borrowing Money for Lender Firms

Because law firms are forbidden from loaning clients money, an industry has developed that markets specifically to plaintiffs with pending personal injury cases. To circumvent New York’s usury laws these fundings are not technically “loans” and are generally referred to as “advances.” (“Usury laws” prohibit charging above a set interest rate for loans.)

Typically, it is understood to be “a contingent interest in the potential post-judgment proceeds of the plaintiff’s case.” It is also called “non-recourse funding.” While the borrower of a “loan” is obligated to re-pay, no matter what happens, which triggers the usury laws, case funding must only be re-paid if the plaintiff wins a money recovery.  The funding company has “no recourse” against the person who receives the funding if the personal injury case is unsuccessful.  This contingent character of the transaction removes it from the application of usury laws, enabling these companies to charge very high interest rates. This distinction between a “loan” and the “transfer of an interest in the case” is the foundation upon which the case-funding industry is built.

Plaintiffs must decide if their need for the funds are so great that they are willing to pay back the advance together with a significant amount of interest at the conclusion of the case, the date of which is likely uncertain.

Sometimes such funding is truly a rescue (e.g., in the event of a looming eviction or foreclosure, for example). Sometimes, it can so significantly reduce the end-of-case net amount to the plaintiff that it compromises the ability to settle the case for what might otherwise be an excellent settlement. Our firm will be happy to review the various considerations around case funding with you and help you make the decision that is in your best interest.

Contact a Personal Injury Lawyer

If you were injured in New York due to another person’s negligence and require legal help, contact a personal injury attorney as soon as possible to discuss your options. Regardless of the exact nature of your injury, our team can start piecing together your case and does not require payment unless we win a money recovery for you. Call now for a free case review and no-obligation consultation at (516) 932-0400.

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