Third-party litigation funding is an arrangement in which an outside “funder” offers to provide money to a party – generally the plaintiff – to pursue a filed lawsuit in return for a share of any damages award or settlement. The funds to individuals are advanced on a non-recourse basis, meaning that if the plaintiff loses, he doesn’t have to repay the money he received. This also means that the loans are conducted outside typical “usury laws” and not subject to any consumer protection.
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