Pre Settlement Funding

by | Sep 3, 2021 | Pre-Settlement

A pre-settlement loan is actually a cash advance on your pending legal case.

Once you have filed a lawsuit, the amount of money that you receive from a lawsuit company will not need to be paid back. How much you get will depend on the estimated value of your claim.

The Process Of Pre Settlement Funding

This type of loan is available to people in a variety of lawsuits, including product liability, workplace injury, personal injury, employment, accident loans, wrongful death, and commercial lawsuits.

Pre settlement funding, also known as a lawsuit advance is different from regular loans in a number of ways. The word “loan” is placed there to allow people to understand what type of assistance they are applying for.

When you get pre settlement funding, you are basically getting an advance on the amount expected from your claim. In order for this to actually be a loan, you would need to pay it back, but you do not need to pay this type of financial assistance back. You will only be required to repay the advance if you win your case, or reach an out-of-court settlement. The fees that are payable will depend on the company that financed the loan.

If you find yourself waiting for the outcome of your lawsuit, getting pre settlement funding can help you a lot with your daily living expenses. Getting such funding can help you to reduce the amount of pressure put on you to settle for a low amount because you will not be in such need of the money from the claim in such a rush.

Here is How Pre Settlement Funding Works

1. Get a Lawyer and File the Lawsuit

In order to be able to secure an advance, you will first need to file a lawsuit, which usually requires the help of a qualified lawyer, who can do it on your behalf. Most lawyers who represent their clients who are in need of such an advance will work on a contingency fee basis. What this means is that the lawyer will agree to get their client the funds and in return, they will get a percentage of the settlement amount. It is normally between 20 and 40% of the settlement amount.

2. Apply for Pre Settlement Funding from a Reputable Funding Company

Once you have acquired legal representation and filed the lawsuit, the company can help you with funding to help you while you are waiting for the outcome of your case. Once you contact these companies, they will get a representative to assess what amount you will likely receive before they can evaluate your situation and give you an amount that they will be able to assist you with and what the rate of interest will be.

3. Take a Look at the Proposed Funding Agreement with Your Lawyer

You and your attorney will get all the documentation outlining the terms of the proposed agreement for an advance. Your lawyer will go through this paperwork with a fine-toothed comb because, at the end of the day, they are responsible for the repayment of the loan. You as the plaintiff will get whatever is left of the settlement once all the fees and loans have been taken off. The company that is funding you is basically “buying” part of your settlement in advance.

4. Decide on Whether Pre Settlement Funding is Right for You or Not

When it comes to deciding whether this type of advance is right for you or not, you need to speak to your lawyer and find out how long it will take before your case will reach a conclusion. There are times when cases can take much longer than initially expected and in this case, you will need to know how much you will require while you are waiting. You might want to consider some of the other options that are available, including a low-interest type credit card, disability assistance which is short-term, or getting money from family or friends. If you find that these options are not going to work for you, then seeking pre-lawsuit funding might be your best option.

Even though there are those companies out there that will charge you as much as 50% interest on these types of advances, a good company with a good reputation will charge you as little as 1-3%. When you are looking for a company that can assist you with an advance, you need to find one that will be upfront with you from the beginning with regards to their process. It is highly recommended that you speak to your lawyer before signing any agreement. You also need to make sure that you get answers to all of your questions before accepting any agreement.

Are Pre Settlement Loans Safe?

Some of the advantages of getting these types of loans are the fact that you will have available cash while you are waiting for your claim to be concluded. This means that you will not have to stress about paying the bills and other living costs. It will also give you the time that you need in order to negotiate a settlement that suits you best.

You do not need to have good credit in order to get one of these loans like you would with a regular loan. Finally, if you choose a good funding company, you can get your advance as soon as 24 hours later.

There are some disadvantages with these types of loans as well, like the fact that you will be charged interest and that some lawsuits can take a long time to be resolved. It is therefore vital that you wait until you really need the money because the sooner you get it, the more interest you will need to pay back once your case is settled.

How Long Will it Take to Get a Loan?

If you choose a trusted company to deal with, you can get your money as soon as 24 hours later. This is not the case with any other type of loan that is available, as they require you to have a good credit score, history, and income. With a pre-settlement loan, only the potential outcome of your case will be the deciding factor.

You do need to make sure that you go through any and all paperwork with your lawyer before you sign any legal agreement. You need to also fully understand the terms of the agreement.

Can my Lawyer Lend me Money?

There are very strict rules against any lawyer lending their client’s any money. Lawyers are able to advance their costs and court costs, but ethically, in all 50 states, they may not give settlement advances to their clients.

This is because of the fact that a lawyer has a financial interest with regards to the outcome of the case and their judgment could be impaired if they do. If you are in fact having problems with money during your lawsuit claim, you need to seek your lawyer’s advice as to what other options you have.

If you do decide to proceed with obtaining financial assistance, your lawyer will be involved in the process. They may need to supply information regarding your case and review the proposed agreement in order to make sure that you, their client. is not misinformed in any way.

Jessica Diaz, CFA

Financial Advisor

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• Masters in Business Administration

McGill University

• B.S. in Business Administration

University of Colorado


• Corporate Finance Advisor

8 Years

• Personal Finance Advisor

11 Years