Pre-Settlement Funding: A Lifeline for Plaintiffs in Financial Distress

When a plaintiff files a lawsuit against a defendant, the legal process can be long and financially draining. Personal injury cases, for example, can take months or even years to settle. Meanwhile, the plaintiff may face mounting bills and financial obligations that cannot wait. Pre-settlement funding provides a lifeline for such plaintiffs, helping them meet their financial obligations while they await the outcome of their lawsuit. This article will discuss the benefits of pre-settlement funding, the process involved, and key considerations for plaintiffs seeking financial assistance.

The Legal Landscape: The Pre-Settlement Funding Industry

The pre-settlement funding industry has experienced tremendous growth in recent years. As the legal system becomes increasingly complex and time-consuming, more plaintiffs are seeking alternative funding options to help them weather the storm. Pre-settlement funding companies, also known as legal finance providers, offer a solution by providing cash advances to plaintiffs in exchange for a portion of their future settlement proceeds.

What is Pre-Settlement Funding?

Pre-settlement funding, also known as lawsuit funding or legal funding, is a non-recourse financial arrangement that provides plaintiffs with immediate cash to cover their living expenses, medical bills, and other financial obligations during the pendency of their lawsuit. Unlike traditional loans, pre-settlement funding does not require credit checks or collateral. Instead, the funding amount is based on the merits of the plaintiff’s case and the estimated settlement value.

The Benefits of Pre-Settlement Funding

Financial Relief During Litigation

The most apparent benefit of pre-settlement funding is the financial relief it provides to plaintiffs during the litigation process. Many plaintiffs face financial hardships, such as lost wages, mounting medical bills, and daily living expenses that add up while they wait for their case to settle. Pre-settlement funding can help plaintiffs stay afloat financially and avoid the pressure to accept lowball settlement offers.

No Risk of Indebtedness

One of the key features of pre-settlement funding is its non-recourse nature, meaning that plaintiffs are only required to repay the funding if they win their case or reach a settlement. If the plaintiff loses the case, they do not have to repay the advance, eliminating the risk of indebtedness.

Leveling the Playing Field

Defendants, especially large corporations and insurance companies, often have deep pockets and can afford to wait out a plaintiff’s financial distress, using it as leverage to force a lower settlement. Pre-settlement funding helps level the playing field by providing plaintiffs with the financial resources they need to fight for a fair settlement or judgment.

Access to Quality Legal Representation

Pre-settlement funding enables plaintiffs to retain quality legal representation, even if they cannot afford to pay upfront legal fees. With the financial support of pre-settlement funding, plaintiffs can hire experienced attorneys who will work diligently to maximize their settlement or judgment.

The Process of Pre-Settlement Funding

The Application

The first step in obtaining pre-settlement funding is to submit an application to a legal finance provider. This typically involves providing personal information, details about the lawsuit, and the contact information for the plaintiff’s attorney. The application process is usually straightforward and can often be completed online or over the phone.

The Evaluation

Upon receiving the application, the pre-settlement funding company will evaluate the merits of the case and determine the estimated settlement value. This may involve contacting the plaintiff’s attorney to gather additional information and documentation. Based on this evaluation, the funding company will decide whether to approve the funding request and the amount of the cash advance.

The Funding Agreement

If the funding request is approved, the plaintiff and their attorney will receive a funding agreement outlining the terms and conditions of the advance. This agreement typically includes the funding amount, the repayment terms, and any fees or interest associated with the advance. It is essential for the plaintiff and their attorney to review the agreement carefully and ensure they understand the terms before signing.

Receiving the Funds

Once the funding agreement is signed and returned, the pre-settlement funding company will disburse the funds to the plaintiff. Depending on the company, the funds can be provided through various methods, such as direct deposit, check, or wire transfer. The process from application to funding can take anywhere from a few days to a few weeks, depending on the complexity of the case and the responsiveness of the plaintiff’s attorney.

Key Considerations for Plaintiffs

When considering pre-settlement funding, plaintiffs should be aware of the following:

  • Interest Rates and Fees: Pre-settlement funding companies charge fees and interest on the funds provided, which can vary significantly between providers. It is crucial to compare rates and fees among different companies to ensure you receive the best possible terms.
  • Attorney Involvement: It is essential to involve your attorney in the pre-settlement funding process. They can help review the funding agreement and negotiate better terms on your behalf.
  • Impact on Settlement: Pre-settlement funding can affect the overall settlement amount you receive, as the repayment is typically taken from the settlement proceeds. Ensure you understand the potential impact on your settlement before accepting a funding offer.
  • Responsible Use of Funds: Pre-settlement funding should be used responsibly and only for necessary expenses, such as living costs, medical bills, and legal fees. Misuse of funds could jeopardize your financial stability and your case’s outcome.


Pre-settlement funding offers plaintiffs a valuable lifeline during the often lengthy and financially challenging litigation process. By providing immediate financial relief, leveling the playing field against well-funded defendants, and allowing access to quality legal representation, pre-settlement funding can significantly impact the outcome of a lawsuit. Plaintiffs should carefully consider the terms and conditions of funding offers, involve their attorney in the process, and use the funds responsibly to maximize the benefits of pre-settlement funding.