According to singer and songwriter Tom Petty, “The waiting is the hardest part.” Anyone who has had to endure a lawsuit would no doubt agree. A civil claim, from start to finish, might take one to three years to resolve. For an accident victim whose injury has caused temporary or permanent unemployment, the challenge becomes making ends meet during the waiting period.

Few people can go that long without a paycheck, and it is not uncommon for them to turn to family and friends for assistance. But what about the individual for whom this is not an option or perhaps no longer an option? Is there a “lender of last resort”? In fact – there is. There are companies willing to provide a plaintiff (the party pursuing a civil claim) with interim financial assistance in return for the plaintiff’s promise of repayment if and when the claim is successfully resolved. These entities are most commonly referred to as Litigation Funding Companies (“LFC”).

Litigation funding is a burgeoning segment of niche finance. According to Dean Lipson, President and founder of Covered Bridge Capital in Blue Bell, PA – one of the most respected litigation funding companies in the industry – the demand for this product continues to grow. “If the insurance industry weren’t so consumed with collecting premiums and denying claims, we probably wouldn’t see the kind of growth in demand that we’re now seeing,” said Lipson.

The litigation funding business model is quite simple: underwriters employed by an LFC evaluate the plaintiff’s lawsuit, typically seeking answers to four fundamental questions: 1) Who caused the accident? 2) To what extent has the plaintiff suffered physical, emotional and financial injury? 3) Is there an insurance company standing behind the defendant and how much coverage is available? and 4) How qualified is the plaintiff’s attorney? If these questions can be answered to the satisfaction of the underwriters, then the plaintiff will be advanced an amount of money.

In return, the plaintiff agrees to repay this advance, plus interest and fees, at the successful conclusion of the lawsuit. The word “successful” is emphasized because LFCs like Covered Bridge advance money on a non-recourse basis. In other words, if the plaintiff loses the case or fails to recover enough money to repay, then Covered Bridge receives nothing. “That’s the risk we assume every time we invest in a case,” Lipson explained.

He adds, “But, I suspect insurance companies will continue to employ their age-old strategy of stall and starve. They know this tactic will lead to smaller settlements.” Lipson emphasizes, “We aim to level the playing field by providing the plaintiff with just enough financial assistance to allow his case to fully develop and make it into the courthouse or into meaningful settlement negotiations. The insurance industry doesn’t like what we do. We’re not good for their business.”

For more information, please visit: www.covbridgecap.com