When is Legal Funding a Good Solution? – Part 2, Income and Expenses
January 21, 2010
Part 2 – Income and Expenses
Now that you’ve found out what to expect out of the legal process and what your potential award may be, it’s time to determine what your financial needs are going to be from now until the time you should expect an award, and what income you have or need to pay those bills. As you read this post, you might think that it is extremely simplistic. That’s because it is. However, you might be surprised to know how many people don’t really have a good grasp on what their income is versus how much money they spend.
If you already have a budget in place to help manage your expenses you’re way ahead of the game. However, if you don’t, don’t worry. Building a family/personal budget itself can be a painful and emotional task – and our guess is, you don’t need any more of that.
What you do need to do though, is to simply write down what your bills and expenses will be each month, from now until you can get back to work and steady and sufficient income. This doesn’t have to be a super-detailed list, but it is important to be as realistic as possible. Items to include, among other possible expenses, might be mortgage/rent, insurance, taxes, car payment, gas, household living expenses, food, and utilities. This list should be specific to your needs.
Once that is done, write down what monthly income sources you have. Then simply match your expected income to your projected expenses. If your income matches or exceeds your expenses, then you’re not really a candidate for legal funding (although there may be some reasons to still consider legal funding which we’ll explore later). However if your estimated expenses exceed your projected income, there are several options; 1. Cut back any unnecessary expenses (i.e. dining out) to bring them in line with your income, 2. Determine if there are ways to increase your income; legal funding, credit/loans, or family/friends.
While planning can be a painful process, once done it can relieve a lot of stress later on. Sure, no budget is perfect and there are always those unplanned expenses that come up, but even a rough budget can help you plan and prepare so they are less stressful. In our next post, we’ll examine those options if you need additional income. More soon!
Bottom line is legal funding isn’t for everyone, but it can be a valued solution if your circumstances leave you in a financial position that is less than desirable. Over the next several posts we’re going to examine the various issues surrounding legal funding and what the customer should consider to determine if legal funding is right for them. As always, if you have comments or questions about this topic feel free to post and/or ask.
Part 1 – Understanding and Expectations
“Have you been injured in an accident that wasn’t your fault? Do you find yourself unable to work or maintain a healthy income as a result of those injuries and therefore unable to pay the bills? Are you seeking the compensation for your injuries that you deserve? If so, then legal funding might be right for you!” Does that sound like a commercial? Of course it does, because that is often the situation that customers of legal funding find themselves in, and if it fits your situation then you understand and are likely looking for resolution yourself.
However, before you pursue a legal funding it is best to consider all of the options to determine if it is a good solution for your individual needs. A legal funding can be a very useful tool if it is carefully considered in light of all other options, but it isn’t the right solution for everyone. Everyone’s financial situation is different.
First, it is important to have reasonable expectations about your legal case because this can greatly impact your decisions. Prior to making any financial decisions, talk to your attorney about your case. Hopefully your attorney has told you what he thinks your lawsuit is reasonably worth, and how long he/she thinks it will take to resolve your case to its fair settlement. If your attorney hasn’t offered this information, then ask them. While they can’t guarantee how much your case will settle for or how long it will take, your attorney should have enough experience to provide a ballpark. This information will help you to plan understand your financial needs and aid in finding a solution going forward and begin to paint a clearer picture as to your potential need for a legal funding.
Assuming at this point you don’t know what your case is worth, unless the injuries you received are significant (i.e. life threatening, paralysis, etc.), know that most personal injury claims don’t result in multi-million dollar jury awards for the plaintiff. In fact these are very rare and take years to move through the legal system. So again, measure your expectations to what is reasonable and fair. Understanding what the reasonable outcome of your lawsuit is will prepare you to plan and make sound decisions.
Therefore, if your lawsuit is like the vast majority of cases in the system, it is probably safe to say that your attorney is not seeking to obtain a financial windfall. The amount your attorney is seeking should be enough, after his fees and expenses, to cover your medical expenses, lost wages, repairs to your car if it was an auto accident, or in the case of a worker’s compensation claim a sum to cover physical therapy, and then some compensation for your pain and suffering.
Once you have a solid understanding of the expected outcome of your case for both a financial award and the length of time to obtain that award, you can begin to consider your needs and if legal funding is a viable solution. Our next post will look at what those needs may be and the potential sources to cover those needs. More soon!
