Legal Funding | Legal Finance | Litigation News, Information and Updates

I recently received a phone call from a person looking for cash to help them out while they waited for their lawsuit to settle. Simple enough because that’s what we do. However, before they continued they wanted a few things clarified… namely, were they calling the right place? At first I was a bit dumbfounded because after all, the name of our business is “Oasis Legal Finance.” The customer proceeded to say that when they did a search on the Internet there were many companies that were displayed in the search results but many had different terms; lawsuit loans, cash advances, legal fundings, etc., which was confusing to the customer. They asked if Oasis provided loans, advances or fundings?

And that’s when it hit me… sure, we understand that all of the above terms refer to the same thing because all those terms have been used to describe the service we provide as our industry has evolved over time. But in fact the terms lawsuit loan, legal cash advance and legal funding don’t mean the same thing and can indeed be confusing. As a consumer, it is easy to see how they might look at the terms lawsuit loan, legal cash advance, and legal funding as three completely different products/services:

1. A loan, well.., is a loan. A great example is when a bank gives you money to buy a car. You make monthly payments to pay back the loan. If you can’t make the payments, the bank comes and takes away the car.

2. An advance can be a trickier to define. A perfect example of an advance is if your employer gives you an advance on your paycheck. They are giving you money ahead of when you would normally get it. Your employer isn’t loaning you the money. On occasion however the word advance and loan is used to describe the same thing.

3. A funding is… ummm, well what is a funding anyway? Traditionally the term funding has been used to describe a transaction where one person/business provides cash (funds) to be used for a specific purpose; i.e. we’re funding the community project, or we’re funding our retirement account.

So, why then were all these terms used to describe the same service? As many industries grow from just starting out to being established in the marketplace, the terminology to describe the business (industry) and/or its products can change for several reasons. When the legal funding industry first began, there was nothing like it in the market. Providing people involved in personal injury litigation with cash to pay for basic living expenses while they waited for their lawsuit to settle was almost completely unheard of. As well, the term “funding” didn’t really exist with the same meaning as how it is being used today. Instead, words like “loans” and “advances” were used in absence of a more accurate descriptor because that is what the consumer was used to.
None of the traditional definitions for words like loan or advance, or even funding provided a perfect match for describing what companies like Oasis Legal Finance, does. So, over time we’ve adopted legal funding as the most accurate descriptor of the service we provide.

Contrary to a loan, a “legal funding” does not require monthly payments, and while it does require a valid legal complaint and an attorney to base the transaction on, the transaction is non-recourse. Non-recourse simply means that if the person’s case is lost, then the person does not have to repay the funded dollars to the funding company. This is a significant, game-changing difference versus a loan!

So, what do so many companies still use words like lawsuit loan, and cash advance? I’ll tackle that in my next post…