Attorneys work hard for months or years to achieve a favorable trial outcome. Clients and attorneys invest thousands of dollars in fees and costs. An appeal entails putting more time and money at risk. It subjects the judgment to reversal or remand. At best, it means another year or two until recovery. In the meantime, there are bills to pay, for client and attorney alike.
What is Non-Recourse Appeal Financing?
Non-recourse appeal financing allows judgment creditors to convert part of the money judgment on appeal into immediate cash, before an appeal is decided. By selling a portion of the judgment on appeal, the judgment creditor eliminates risk of recovery on the portion of the judgment sold. This is because no repayment is required if the appeal is ultimately lost. The seller gets his money in advance of the appellate decision.
The money may be used by clients to pay trial or appellate attorney fees, personal bills, reimburse costs, or just to have the peace of mind that they can set cash aside, if ultimately there is no recovery. In addition, attorneys can receive an advance on their lien interest in the judgment on appeal, essentially monetizing the lien before the appeal is decided.
The service may be helpful for financially burdened judgment creditors with money judgments on appeal. Immediate funds are made available for appellate attorneys fees to vigorously defend a judgment on its merits and to minimize the economic strains which often result during the one or two year appeal period.
Experienced trial and appellate counsel are well acquainted with the financial difficulties with which many plaintiffs must cope. One of the key concerns is that the financial strains on the judgment creditor may compel a settlement for substantially less than the amount awarded at trial. Often unfair settlements are consummated because judgment creditors cannot afford to vigorously defend their judgments on appeal.
What Are the Charges or Fees?
None. The funding is not a loan. There are no installment payments. The purchaser is not a lender. Instead, the finance company purchases a portion of the judgment from the plaintiff or attorney, or in some cases, both.
What Happens if the Case is Overturned on Appeal?
By acquiring a portion of the judgment, the purchaser runs the same risk of recovery in the appeal as the plaintiff. However, if the plaintiff ultimately loses and recovers nothing, the plaintiff keeps the funds advanced and the purchaser is owed nothing.
What Benefits Can an Appeal Finance Program Offer Plaintiffs?
With more financial certainty, a judgment creditor may be more likely to receive a fair settlement offer or favorable appellate result. Financial assistance can remove the urgency for a settlement and send the appellant a message that the plaintiff has the financial resources to go forward. This may prompt the appellant to come forth with a fair settlement proposal, rather than risk the consequences of a defeat in the appeal.
There are no restrictions as to how a judgment creditor uses the money received. If not used to finance the appeal, funds advanced may be used to pay living expenses, legal expenses, or just be set safely aside.
What Benefits Does An Appeal Finance Program Offer Attorneys?
An outstanding contingent fee interest in a judgment on appeal with a claim for costs advanced can create tremendous financial pressure on an attorney, a law practice and a family. Appeal financing may convert an attorney's lien interest in the judgment into a more liquid form. Like a plaintiff, if the case is ultimately lost and there is no recovery, the attorney keeps the funds advanced and the purchaser is owed nothing.
Do the Client and the Lawyer Lose Control of the Case?
Only financial assistance is supposed to be provided to plaintiffs and attorneys. The purchaser must maintain a strict "hands off" policy. The purchaser does not provide legal advice or legal services to the judgment creditor, and does not require access to, or review of, privileged client information. Control of the case should rest solely with the client and attorney.
What Are the Ethical Considerations of a Transaction?
Reputable companies have designed their transactions and business procedures to meet the standards of practice and legal ethics. Finance companies do not and should not offer legal advice and do not interfere in the attorney client relationship. Client and counsel maintain control of the appeal and determine all matters of strategy, representations, case management and settlement. Many companies have had their programs reviewed by legal ethics experts, and will provide copies of opinions that the financing transaction fits within the parameters of legal ethics.
A Word of Caution
As with everything, do your homework. Choose a company wisely and consider the risks and benefits of appeal or any other kind of lawsuit financing. The terms of an appeal financing transaction vary greatly from company to company, so it may be in the seller's best interest not to base their decision on price alone.
Be sure to also weigh the benefits of selling without recourse a portion of the money judgment on appeal. Consider the benefits to the seller of a non-recourse transaction if there is no recovery. Consider the experience and reputation of the company with whom you intend to do business. Get references from reputable sources and talk to attorneys who have sold portions of their interests or advised clients who have sold portions of their judgments on appeal. Appeal finance provides an unusual opportunity to monetize a case long before the appeal has been resolved.