IT COSTS A LOT TO GET SUED
(EVEN IF YOU'RE IN THE RIGHT)
A Small Business Guide to Errors and Omissions

Chapter 2: Dealing with Errors and Omissions Lawsuits
Part 5: Don't Waste Time with Lawsuit Loans

Lawsuit loans are cash advances given to plaintiffs by a third party before a case is settled. In exchange, the lender receives a percentage of the judgment or settlement. If a case isn't successful, the lender could lose money. For this reason, the third-party lender is usually very selective about the cases they fund, opting for the ones with the highest probability for success.

If you're wondering whether you can get lawsuit loans to cover yourself when you're sued, the quick answer is no. These "loans" are only available to plaintiffs. Defendants aren't usually funded.

And that may be a blessing in disguise. According to the New York Times New browser window icon., these loans usually come with exorbitant interest rates. In some cases, interest and fees escalated to 76 percent of the loan amount in the first year.

Lawsuit loans are usually only for plaintiffs and cannot help defendants fund their lawsuits.

Next: Chapter 3: Potential Outcomes in Errors and Omissions Lawsuits