Lawsuits can have a serious effect on one’s finances. For one, they tend to be lengthy, lasting several months or even years. For another, it costs money to sue and be sued. In many cases, the highest cost associated with a lawsuit is the attorney’s fees and the cost of not having the money you’re going to get win you win the court case to spend on investments now.

Most lawyers charge by the hour, so even the simplest of cases can cost tens of thousands of dollars at the very least if you are not working with an attorney who is taking the case on contingency. That means they only get paid when you get paid.

There is also a myriad of other costs that need to be paid for, such as filing fees, service fees, and discovery fees, on top of other extra costs. And it is the client that pays all of these either up front or out of the money awarded when the case does settle and you get your money.

In case the client wins the case, there should be no problems with paying for all expenses. However, during the course of the trial, some unforeseen costs could pile on top of other unforeseen costs. Additionally, being involved in a lawsuit could take the person concerned away from their job or source of income. As a result, many people who are involved in lawsuits find it difficult to make ends meet. Fortunately, there are financial support options that could help tide you over in case the burden of paying for a lawsuit becomes too much. A pending lawsuit funding loan may the best option.

What is a Pending Lawsuit Funding Loan?

Lawsuit funding loans are relatively new, having first been made available in the 1990s. As its name implies, a pending lawsuit funding loan is a type of loan intended for individuals who require advance funding against their expected settlement. It is a type of cash advance wherein the plaintiff could borrow from a lender who specializes in this type of loan, with the intention of paying it back after the settlement funds are paid to the plaintiff. A pending lawsuit funding loan is sometimes called a lawsuit settlement loan, settlement funding, or litigation financing.

I want to know How Does a Pending Lawsuit Funding Loan Work?

A funding loan is essentially a cash advance that the plaintiff can take out. There are third-party companies that offer pre-settlement funding loans such as Once the plaintiff has applied for a loan, the funding company will review the case to determine if it meets existing loan requirements. At this point, the company will likely contact the plaintiff’s attorney to acquire more information about the case so it can be evaluated thoroughly. Once the funding company approves the application, it will release the loan under the agreement that it will be paid back with interest and other fees once the settlement is received.

Who Needs It? Going through a lawsuit can be a very stressful ordeal. Many people experience not only mental and emotional issues but financial problems as well. People have been known to tap into their life-savings just to fund their day-to-day expenses while the trial is active. The lack of income, along with other expenses that a lawsuit typically comes with can pose a serious financial burden on an individual and his family.

Plaintiffs of lawsuits that expect a settlement will need a pending lawsuit funding loan if they need financial assistance. However, not every plaintiff can benefit from it. If you are a plaintiff in a case with a reasonably foreseeable settlement disbursement and you need a source of funds during the trial, a pre-settlement loan can be an excellent option. This is mainly an issue if the plaintiff is unable to work or earn an income while the case is going on.

Who Qualifies?

Not every individual qualifies for a pre-settlement loan, although occasionally, some lenders may offer support to some depending on the case in question. In general, those who usually qualify for a loan are plaintiffs for the following types of cases:

  • Personal injury
  • Medical malpractice
  • Work-related cases
  • Slip and fall claims
  • Employment discrimination
  • Whistleblower lawsuits
  • Auto accidents
  • Animal bites
  • FELA (Federal Employers Liability Act) especially cases involving railroad employees

The common element in this list of qualified cases is a settlement. In general, plaintiffs of any of the above cases can reasonably expect some type of disbursement or compensation. It is against this compensation that the pending lawsuit funding loan will be granted.


The funds will pay for high-quality legal assistance. A good lawyer is not cheap. Having access to sufficient funds will allow the plaintiff to hire the best lawyer’s for the job. This helps increase the possibility that the case would have a favorable outcome. The loan can be a good source of much-needed funds. Since some lawsuits can last months or even years to complete, having a source of income during this time period can go a long way to ease one\’s worries and provide for day-to-day needs.

The loan will only be paid back if the outcome of the case is favorable. If the plaintiff loses the case, a good loan company will not charge the amount of the loan and interest. By lending the funds to the plaintiff, the company is actually taking on the risk of the loan. The funding company will not factor in the applicant\’s credit history. A pre-settlement loan is not a traditional type of loan, which means the applicant\’s credit score will not be considered a factor for approval. As long as the plaintiff is qualified and has a fairly strong case, he/she is likely going to receive financial help.

Fast approval of loans is a crucial part of a pre-settlement loan. Depending on the lending company and other factors, it is possible to receive the funds in as short as 24 or 48 hours after application. The funds are paid via debit cards or check.


Some cases do not qualify for a pre-settlement loan. A pending lawsuit funding loan is usually only granted if the plaintiff has a high likelihood of winning or settling the case. By lending the money, the funding company will carry a good amount of risk. To protect its interests, it will have to provide funds only to the plaintiffs whose case is the most likely to win. It may prove to be too costly for some.

Pending lawsuit funding loans carry an interest that will be charged along with the principal amount. Since interests are charged annually but compounded monthly (or weekly, depending on the company), lawsuits that last for several years may ultimately cost more. However, the funding company will not charge more than the actual amount of the award or settlement.

The plaintiff will not receive the full amount of the settlement. The settlement from the case acts like collateral to the funding loan. As such, the loan will be paid back by deducting it (plus interest) from the settlement amount. This means that the plaintiff will not be able to enjoy the full settlement awarded by the court.

Is a Pending Lawsuit Funding Loan the Right Option Me?

Of course, there is a number of options that may be considered as a source of funds during a lawsuit. A company that offers a funding loan against a settlement is simply one option that provides a very viable means to manage one\’s financial needs, at least temporarily. To get the most out of a pending lawsuit funding loan, it is a good idea to try to do research about what is currently available. A good resource to try is ALFA or American Legal Finance Association. ALFA implements the best practices program that member funding companies must comply with. ALFA also ensures that its members provide fair services to potential clients. It is also a good idea to discuss the merits of a pending lawsuit funding loan with the case attorney, who may be able to negotiate reasonable terms on behalf of the client.