The process of litigation involves several, complicated issues. It may take a while before the case is settled. Many plaintiffs lack the resources to appoint a good lawyer and invariably opt for out of court settlements. Today, this scenario is changing. A number of litigation financing companies have come forward to provide financial aid. Litigation financing companies also provide monetary help to attorneys and law firms that are awaiting settlements. Litigation loans are offered in the form of cash advances, repaid after settlement.

Pre-settlement litigation loans are generally offered to plaintiffs, on a non-recourse basis. The plaintiffs do not have to repay the cash advance if they lose the case. However, if they receive any compensation, they will have to repay the loan, by giving a portion of the settlement amount to the financing company. Many financing companies offer litigation loans to attorneys on a recourse basis. After the case is settled, the attorney has to repay the loan amount, along with interest. The company may allow the attorney to repay the interest amount after the settlement of the case.

Post-settlement loans can offer huge financial relief, when the settlement is delayed due to some reason, after the case is settled. It is relatively easy to obtain this form of loan. Post settlement loans are usually short-term loans.

The fees and interest rates attached to a litigation loan may vary, depending on the financing company. There are financing companies that offer litigation loans on a flat fee basis. The financing company determines the loan repayment amount at the time of offering the loan. A few financing companies offer litigation loans on a recurring fee basis. A fixed monthly fee is charged, depending on the loan amount.

Litigation loans are associated with high interest rates. It is advisable consider other possible loan options too.