44 terms
Every word they use, in plain English.
Injury claims and funding agreements are full of terms nobody explains. Each one here gets a page, a one-sentence definition, and why it matters to you.
Funding
14 terms
- Pre-settlement funding
- Pre-settlement funding is a non-recourse cash advance against a pending legal claim, repaid from the settlement if the case recovers and canceled entirely if it does not.
- Post-settlement funding
- Post-settlement funding is a cash advance taken after a case has settled but before the settlement money has actually been disbursed.
- Non-recourse
- Non-recourse means an advance can be repaid only from a specific source — here, the proceeds of your case — and the person who received the money is not personally liable if that source produces nothing.
- Recourse
- Recourse is a lender's right to pursue a borrower personally for repayment — through wage garnishment, bank levies, collections or credit reporting — if the agreed source of repayment falls short.
- Lawsuit loan
- "Lawsuit loan" is the common search term for a pre-settlement advance, but it is not accurate — a genuine advance is non-recourse and creates no personal debt, while a loan is owed regardless of how the case ends.
- Buyout
- A buyout is when one funding company pays off a claimant's existing advance with another company and replaces it with its own agreement, usually on better terms.
- Compounding
- Compounding is when charges are calculated on a balance that already includes previous charges, so the amount owed grows on itself over time.
- Simple (non-compounding) charge
- A simple charge — what a lender would call simple interest — is calculated only on the original amount advanced, never on accumulated charges, so the balance does not grow on itself.
- Cap
- A cap is a hard ceiling on the total amount repayable on an advance, expressed as a multiple of the amount advanced — beyond which the balance stops growing regardless of how long the case runs.
- Application fee
- An application fee is a one-time charge for processing a funding request — $100 at Get Lit Money, charged on a client's first advance only and never paid out of pocket.
- Processing fee
- A processing fee is a per-advance administrative charge — $100 at Get Lit Money — applied to every advance, added to the settlement repayment, and never growing over time.
- Closing fee
- A closing fee is a charge some legal funding companies apply when an advance is funded, sometimes as a flat sum and sometimes as a percentage of the amount advanced.
- Fee stacking
- Fee stacking is the practice of layering several separate charges — closing, document filing, underwriting, servicing and wire fees — on top of the advertised rate, so the real cost of an advance is materially higher than the rate implies.
- Funding agreement
- A funding agreement is the contract between a claimant and a funding company setting out the amount advanced, the charges, the repayment schedule and the lien against the case proceeds.
Claims process
10 terms
- Maximum medical improvement
- Maximum medical improvement, or MMI, is the point at which an injured person's condition has stabilized and is not expected to improve further with additional treatment.
- Impairment rating
- An impairment rating is a physician's percentage assessment of permanent loss of function after maximum medical improvement, used mainly in workers' compensation to calculate the permanency award.
- Independent medical examination
- An independent medical examination, or IME, is an evaluation by a physician chosen and paid for by the insurer rather than by the injured person, used to assess injuries and the treatment claimed.
- Discovery
- Discovery is the formal pre-trial process in which each side must produce documents, answer written questions and give sworn testimony, and it is usually the longest phase of a litigated case.
- Deposition
- A deposition is sworn out-of-court testimony given in response to questions from opposing counsel, recorded by a court reporter and usable at trial.
- Litigation
- Litigation is the phase of a claim after a lawsuit has been filed, encompassing discovery, motions, and trial preparation, and it typically adds a year or more to a case's timeline.
- Mediation
- Mediation is a settlement negotiation conducted with a neutral third party who moves between the sides, and it resolves a substantial share of injury cases without a trial.
- Arbitration
- Arbitration is a private dispute process in which an arbitrator issues a decision instead of a judge or jury, and it is usually binding and difficult to appeal.
- Settlement
- A settlement is an agreement resolving a claim for an agreed sum, in exchange for which the claimant signs a release permanently giving up the right to pursue it further.
- Workers' compensation
- Workers' compensation is a state-run no-fault system paying medical costs and partial wage replacement for workplace injuries, in exchange for which employees generally cannot sue their employer directly.
Money and liens
6 terms
- Lien
- A lien is a legal claim on settlement proceeds that must be satisfied out of the recovery before the claimant receives their share.
- Medical lien
- A medical lien is a healthcare provider's claim on a settlement for treatment given on credit while the case was pending, repaid from the recovery before the claimant's share.
- Letter of protection
- A letter of protection is a written undertaking from an attorney to a medical provider promising payment from the eventual settlement, allowing treatment to proceed without payment at the time.
- Trust account
- A trust account, sometimes called an IOLTA account, is a separate bank account in which an attorney is required to hold client settlement funds until they are properly disbursed.
- Disbursement
- Disbursement is the payment of settlement funds out of an attorney's trust account, following the order of attorney fees and costs, then liens, then the claimant's remaining share.
- Contingency fee
- A contingency fee is an attorney's fee paid as a percentage of the recovery rather than hourly, meaning no fee is owed if the case does not recover — commonly one third before suit is filed and more afterwards.
Legal
9 terms
- Statute of limitations
- A statute of limitations is the legal deadline for filing a lawsuit, which varies by state and by claim type — commonly two to three years for personal injury — and after which the claim is barred permanently.
- Tolling
- Tolling is the legal pausing of a statute of limitations, which stops the filing deadline from running during a defined period such as a claimant's minority, incapacity or a defendant's absence from the state.
- Notice of claim
- A notice of claim is a formal written notification that must be filed before suing a government entity, typically within a much shorter window than the ordinary statute of limitations.
- Liability
- Liability is legal responsibility for causing harm, and establishing it is the first requirement of any injury claim — without it, the extent of the injury does not matter.
- Comparative negligence
- Comparative negligence is a rule that reduces an injured person's recovery in proportion to their own share of fault, rather than barring it outright.
- Contributory negligence
- Contributory negligence is a strict fault rule under which an injured person who bears any share of the blame — even 1% — recovers nothing at all.
- Damages
- Damages are the money awarded to compensate for harm, divided into economic damages such as medical bills and lost wages, non-economic damages such as pain and suffering, and in rare cases punitive damages intended to punish.
- Release
- A release is the document a claimant signs at settlement giving up all further claims arising from the incident, in exchange for the agreed payment.
- Usury
- Usury is the charging of interest above a legally permitted maximum, and whether usury caps apply to litigation funding is a question courts have answered differently across states.
Insurance
5 terms
- Subrogation
- Subrogation is a health insurer's right to be reimbursed from a claimant's settlement for medical costs it paid in connection with the injury.
- Policy limits
- Policy limits are the maximum amount an insurance policy will pay for a claim, and they frequently cap a claimant's practical recovery regardless of how severe the injuries are.
- Underinsured motorist coverage
- Underinsured motorist coverage is part of your own auto policy that pays when an at-fault driver's insurance is insufficient to cover your injuries.
- Insurance adjuster
- An insurance adjuster is the insurer's employee who investigates a claim, evaluates it, and negotiates settlement on the insurer's behalf.
- Bad faith
- Bad faith is an insurer's unreasonable handling of a claim — denying without basis, delaying without cause, or failing to settle within policy limits when it should — which can expose the insurer to liability beyond those limits.
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