The world of a lawsuit loan broker is often turbulent due to a cyclical industry, inconsistent litigation financing companies, and the struggle to weigh advertising expenditures vs. the resulting leads. You (litigation broker) must not only survive but must flourish during active times of the year in order to be able to survive the down times. First of all, let me quickly define a lawsuit loan and a lawsuit loan broker:
Lawsuit loan: A cash advance based upon the merits of a lawsuit that provides a plaintiff with sufficient funding to reach the conclusion of the case when the plaintiff will receive his/her fair share of the settlement or verdict. Lawsuit loans are not based on a plaintiff’s prior credit or bankruptcy status. Lawsuit financing companies give non-recourse funding to plaintiffs thus requiring the plaintiff to pay back the advance and fees/interest only upon a favorable decision in the case. If the case is lost then the cash advance is kept by the plaintiff with no obligation. Therefore, a lawsuit loan is not a true “loan” but rather a pre-settlement cash advance also know as: litigation funding, litigation finance, litigation loan, lawsuit funding, lawsuit cash advance, case loan, case cash advance, plaintiff cash advance, litigant funding, pre-settlement loan, and pre-settlement lending.
Lawsuit loan broker: A person who seeks funding for their client (plaintiff) who is in need of a lawsuit loan. Lawsuit loan brokers are also known as: litigation funding broker, litigation finance broker, litigation loan broker, lawsuit funding broker, lawsuit cash advance broker, case loan broker, case cash advance broker, plaintiff cash advance broker, litigant funding broker, pre-settlement loan broker, and pre-settlement lending broker. There are no barriers to entry so anyone can become a litigation broker.
The following are tips to help you succeed in this challenging industry:
1) Research the industry nuances
The litigation financing industry is a cyclical industry. There is heavy volume during the November and December months as plaintiffs find themselves in need of money to pay for increased utility bills and increased credit card bills due to the upcoming holidays. Then there is a slowdown that starts around the middle of January and continues until April when it levels-off. You should keep this in mind when marketing and advertising because advertising dollars can be spent more wisely if they are spent during certain times of the year. collection laws in California
2) Understand your clients
You must understand plaintiffs’ situations in order to properly help them. These are people who many times have been seriously injured, cannot work, and have mounting bills that they cannot pay. They have already found themselves asking for help in the way of hiring an attorney and bringing suit against another party. Now, they are again asking someone for help since their wait for any settlement money is usually months if not years away. If you understand your clients’ situations then you will be rewarded in terms of helping them find much needed funding but also in the way of future business. The percentage of repeat lawsuit loan applicants is high therefore the chances are good that your client will be calling you again or they will pass your information to a friend who may need your help.
3) Understand your funding sources
You may have a solid rapport with all of your clients (plaintiffs) but how well do you understand the litigation financing companies that you use? Do you know the states and/or case types that litigation financing companies specialize? If not then the lawsuit loan can take days or even weeks longer than it should to get an answer from the funding company. Do you know that some litigation financing companies reserve the right to broker lawsuit loans that you originally sent to them for funding? You should do one of the following, either research every litigation financing company in the industry (~60 plus) or use a service such as The Funding Exchange (www.TheFundingExchange.com). The Funding Exchange is the front-end to a network of top litigation financing companies and it allows you to electronically submit one lawsuit loan application to these companies. Coordinating with your funding sources is as important as coordinating with your clients.
4) Start with a small advertising budget
The biggest mistake that new lawsuit loan brokers make is that they overspend on advertising immediately. New lawsuit loan brokers are so excited to start in this new industry that they spend big advertising dollars initially and end up spending too much in the wrong places and end up in a hole. Start small and start advertising in different mediums such as: local newspapers, local radio stations, local personal injury attorneys, etc. There is no right or wrong place to advertise but you should definitely start small to see what works and then expand your budget accordingly.