Client Centered.
Results Driven.

Photo of attorneys Jeffrey Cooper and Agustin Sevillano

Client Centered.
Results Driven.

Photo of attorneys Jeffrey Cooper and Agustin Sevillano

Cooper Sevillano Legal Funding FAQ

This Legal Funding FAQ page is for clients of Cooper Sevillano who have requested to borrow cash against their case.  Please read this information sheet carefully before deciding whether you want Cooper Sevillano to apply for a cash advance on your behalf.  If you decide to apply and your application is approved, you will be entering into a formal binding contract with a third-party loaning company that is in no way affiliated with Cooper Sevillano.

Commonly Asked Questions About Legal Funding

What is legal funding?

Legal funding is the process in which litigants receive cash advances from third party funding companies in exchange for giving up a percentage share of the money received by way of settlement or judgment (if the case proceeds to trial).

Is legal funding the same thing as a “loan”?

No.  Although people often confuse the two and use the two terms interchangeably, legal funding is not a loan.  Rather, it is actually a form of nonrecourse debt.

What are the advantages of legal funding transactions?

One advantage of legal funding is that it provides our clients with cash that can be used for virtually any purpose while they wait for their case to resolve.  Another advantage is that if a plaintiff-applicant loses the case, he/she is not obligated to repay the loan.

What are the disadvantages of legal funding transactions?

There are several.  The biggest disadvantage for our clients is the exorbitantly high interest rates and fees that the third-party funding companies typically charge.  In the United States, banks and other institutions are prohibited from charging similar interest rates pursuant to usury and fair-lending laws.  Unfortunately, since these types of transactions are not considered “loans”, they are not subject to Connecticut’s banking rules, regulations and lending laws.

How do the interest rates and fees apply to my transaction?

While on the surface, the interest rates charged by third party funding companies seem reasonable, what they fail to tell you is that the interest is actually compounded monthly.  The next several examples demonstrate the difference between basic interest, which is paid only once, and compound interest, which is paid on previously earned interest every month.

Approximately how much money would I owe a bank if I borrowed $1,000 at 4% for 1 year?

$1,040.00

Approximately how much money would I owe a funding company if I borrowed $1,000 at 4% for 1 year?

$1,601.03

Approximately how much money would I owe a bank if I borrowed $1,000 at 4% for 2 years?

$1,080.00

How much money would I owe a funding company if I borrowed $1,000 at 4% for 2 years?

$2,563.50

Does Cooper Sevillano support my application for legal funding?

The answer to this question is not a simple one and will vary depending on the circumstances of each particular client.  Although in a perfect world Cooper Sevillano would discourage all clients from applying for legal funding due to the exorbitant interest rates and fees the companies charge, we also recognize that not everyone can go to a “rich” friend or relative to get financial assistance when times get tough.  For those of our clients who have no other choice, Cooper Sevillano acknowledges that consumer legal funding is one opportunity to get cash now while they wait for a resolution of their case.

 

Does the value of my case increase if I have to pay back one of these loans?

Absolutely not.  While the value of a case is dependent on a myriad of factors, whether a plaintiff is obligated to pay back one of these loans is not one of them.  It is important to keep in mind that the money you pay back to the funding company at the end of the case would technically be yours if you had not taken out a loan in the first place.

Can Cooper Sevillano negotiate better terms and payback less at the end of the case?

In most situations, the answer is ‘no’.  Because the funding companies feel they are taking such a substantial risk in lending the money out in the first place with no guarantee that they will get something back, they are extremely reluctant to take back less than what they are owed if the money is available at the end of the case.

Conclusion

There are several reasons why Cooper Sevillano discourages you from applying for legal funding including, but not limited to, exceptionally high interest rates or rates of return, exorbitant processing fees and unpredictable loan terms.  Ideally, Cooper Sevillano would prefer that you consult your other options first, like approaching a friend or relative, or finding a job or taking on a second job if possible, at least until your case is concluded.  On the other hand, we recognize that legal funding may be your only realistic option.  If that is the case, we encourage you to only borrow the SMALLEST AMOUNT OF MONEY that you think you will require because anything more than that will end up being tremendously wasteful and serve to unnecessarily reduce the amount of your net recovery.