Patent Funding On-Line
18 Guidelines for Patent Lawsuit Funding and Commercial Lawsuit Funding
By Paul Sherman
Lawsuit funding, patent funding and commercial lawsuit funding are different types of non- recourse funding. Lawsuit funding carries no risk to plaintiffs in patent lawsuits because the plaintiffs owe nothing if they lose the case. Commercial lawsuit and patent lawsuit funding programs provide plaintiffs with immediate cash to give them and their attorneys time to negotiate a larger cash settlement!
Most of the plaintiffs involved in commercial and patent lawsuits do not realize they can get a cash advance before their case settles. It is called lawsuit funding or patent funding, but it is also referred as a lawsuit loan, legal finance, legal financing, legal funding, legal funds, lawsuit cash advance, litigation financing, pre-settlement funding and plaintiff cash advance. The following 18 guidelines are what every plaintiff in a commercial or patent lawsuit must know about commercial lawsuit and patent lawsuit funding. These guidelines will assist the commercial or patent lawsuit plaintiff to select the best patent funding solution.
1. Who Is Eligible for Commercial Lawsuit and Patent Lawsuit Funding?
If you are the plaintiff in any type of commercial litigation (including a patent infringement lawsuit), and you have a compelling claim and your attorney is representing you on a contingency basis, you are probably eligible for a commercial litigation or patent lawsuit funding. You may apply as an individual or, if your business in the plaintiff in the litigation, apply for patent funding under your business, be it a corporation, LLP, LLC or other type of entity.
2. How Can I Benefit from Commercial Lawsuit or Patent Lawsuit Funding?
Many plaintiffs are forced to accept a low offer from the defendant. Patent lawsuit funding gives your attorneys the ability to get the full value for your case. The defendant who senses the patent lawsuit plaintiff is short of funding will offer you far less than what the case is really worth. Patent lawsuit funding gives patent infringement plaintiffs − or any commercial litigation plaintiff – the staying power to hang tough and fight for a larger, fairer settlement.
3. What Types of Cases Qualify for Funding?
In addition to patent infringement lawsuits, other commercial litigation such as torteous interference, breach of contract, building and construction disputes, fraud and product liability also qualify for lawsuit funding.
4. Is Good Credit and Proof of Income Necessary to Obtain Patent Lawsuit Funding?
You or your business’s credit ranking or income is NOT a factor in receiving commercial lawsuit or patent lawsuit funding. The funding decision is based purely on the merits of your lawsuit and the legal claim you are making.
5. Why Not Just Get a Bank Loan?
Traditional financial institutions, including banks, rarely loan money for the funding of patent infringement lawsuits, commercial litigation or any other type of civil litigation. They deem the practice of patent lawsuit funding and commercial lawsuit financing as too risky.
6. Is Patent Lawsuit Funding a Loan?
No, it is NOT a loan. Patent funding and other types of litigation funding are non-recourse advances. Unlike a loan, if you lose your case, you owe nothing in return. Loans are repayable, regardless of any other factors. Should your house burn to the ground or be swept away in a flood, you still owe the balance on the mortgage. If your car is stolen or destroyed or does not run, you still owe the balance on the car loan. A loan is an obligation which must be repaid with interest. Patent lawsuit funding, however, and other types of legal funding, are actually the purchase of an interest in your settlement. So, if you lose your lawsuit, you do not owe the funding company anything.
7. Are There Any Out-of-Pocket Fees or Costs?
Usually not. A reputable patent lawsuit funding company should not charge any upfront fees such as any application fee, processing fee or any monthly fee. There should be only a single fee charged for the patent lawsuit funding based upon the length of time it takes to settlement your patent infringement lawsuit (or other type of commercial lawsuit). There will be a specific repayment amount, due and payable only after the case resolves itself successfully. And if the case is unsuccessful, no repayment required.
8. Will I Have to Sign Any Documents?
Yes. You will need to sign an application and after you are approved for patent lawsuit funding, both you and your attorney will sign have to sign the Patent Lawsuit Funding Agreement.
9. How Much Funding Can I Get?
Patent lawsuit funding advances are generally limited to from 10% to 15% of the projected case value. The minimum advance is usually around $25,000 and the maximum amount available on a single case is one million dollars.
10. Is the Defendant or the Defendant’s Attorneys Notified?
No. The only parties who know about the patent lawsuit funding transaction, are you (the plaintiff), the attorney or law firm representing you in your patent lawsuit, and the lawsuit funding company.
11. How Long Will It Take to Get the Funds?
Once you are approved, the patent lawsuit funding company will wire transfer funds to your bank account or they can issue a check and overnight it to you.
12. How Is the Patent Lawsuit Cash Advance Funding Paid Back?
The cash advanced to you, plus the accumulated charges for the use of those funds, is paid out of the financial settlement from the case. It is paid by your attorney directly to the patent lawsuit funding company at the same time your portion of the proceeds of the claim is paid to you.
13. What Happens if I Lose?
You owe nothing! The patent lawsuit funding company is out the funds it advanced to you. That is what is meant by patent lawsuit funding being “contingent” or on a “contingency basis.” Repayment of the funding of your patent lawsuit is “contingent” you your either winning the case at trial or reaching an out-of-court settlement with the client.
14. (A) What Can I Use the Money for?
Technically, you can use it for anything you like. However, the purpose of patent lawsuit funding is to provide funding of litigation expenses such as research, hiring expert witnesses, create trail exhibits, court reporters and videographers, filing expense, travel costs and other items required to aggressively prosecute your patent lawsuit.
14. (B) What if I Need More Money?
If you run through the initial patent lawsuit funding the funding source provided to you or agreed to provide, you can always go back to the lawsuit funding company and request more funding. They will take another look at your patent infringement lawsuit to determine if you still have a viable claim before they provide additional funding.
15. Does the Lawsuit Funding Company Get Involved in My Patent Infringement Lawsuit?
NO. They have no input to, or control of, your patent infringement lawsuit. They do not get involved in the attorney-client relationship. All management and decisions pertaining to your lawsuit are made by you and your attorney. The lawsuit funding company has no role in the prosecution of the lawsuit. Their only involvement is to initially review your lawsuit documentation so they can evaluate if they want to provide funding.
16. How Will My Attorney Feel about My Securing Funding for My Patent Infringement Lawsuit?
Attorneys are sympathetic to the funding limitations of their clients. In most states, attorneys are not permitted to provide lawsuit funding for clients, but they are allowed to assist in seeking third-party funding or to refer clients to lawsuit funding sources. You can apply for lawsuit funding without consulting your attorney, however, your attorney will play an important role in obtaining patent lawsuit funding. Attorneys are often willing – even eager − to help a client obtain funding for his or her patent lawsuit expenses because it means the attorney can prosecute the patent lawsuit more aggressively, and the client is less likely to accept a low-ball offer from the defendant to settle the patent lawsuit. Applying for patent lawsuit funding does not interfere in any way with the agreement or arrangement between you and your attorney.
17. Why Can’t My Attorney Lend Me Money?
First, few attorneys or law firms have cash on hand that they can lend to plaintiffs. And even if they did, the American Bar Association prohibits attorneys from lending money to clients. This prohibition exists to prevent a conflict of interest from arising between an attorney and his client. If you owed your attorney money, you might feel pressured to accept your attorney's advice to settle your case when you really did not want to accept the amount offered. This would cause a conflict of interest because your attorney would now also be your creditor. In fact, the American Bar Association expressly prohibits attorneys from loaning money to their clients.
18. (A) Is Patent Lawsuit Funding Legal?
Absolutely! You own your patent infringement lawsuit, so your claim is just like a piece of property. Other than the share you owe your attorney, and any other liens they may be, the remaining portion of the lawsuit is yours. You may use it for collateral for any purpose, and patent lawsuit funding is a very good purpose.
18. (B) Is the Process of Obtaining Patent Lawsuit Funding Confidential?
Yes. The total process is confidential. Underwriters at the lawsuit funding company take a look at your patent lawsuit to determine if they think you have a good chance of collecting on your claim. These are the same documents that your attorney prepared to fight your case. If they think your chances of winning your patent infringement lawsuit are good, they will provide you with lawsuit funding. Patent lawsuit funding is a private agreement between you and the lawsuit funding company.
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