What Is A Pre-Settlement Lawsuit Advance

A pre-settlement lawsuit advance, also known as pre-settlement funding, is a cash advance provided to a plaintiff in a pending lawsuit before the case is settled. It’s not a traditional loan, as repayment is contingent on the plaintiff winning the case or reaching a favorable settlement. If the plaintiff loses the case, they typically owe nothing.

Here’s a more detailed explanation:

What a Pre-Settlement Lawsuit Advance is/is not:

Cash advance – It’s a way for plaintiffs in personal injury or other types of lawsuits to access funds before their case is resolved.

Not a loan – Unlike a traditional loan, repayment is only required if the lawsuit is successful.

Contingent on success – The advance is “non-recourse,” meaning the funding company takes on the risk that the plaintiff might not win the case.

How it works:

1. Plaintiff applies: The plaintiff, represented by an attorney, applies for funding with a pre-settlement funding company.

2. Case review: The funding company assesses the case’s merits, potential settlement value, and likelihood of success.

3. Funding agreement:If approved, a funding agreement is signed, outlining the advance amount, repayment terms (including interest and fees), and the process for repayment from the settlement or judgment.

4. Funds released: The agreed-upon amount is provided to the plaintiff.

5. Repayment upon success: If the plaintiff wins their case or reaches a settlement, the funding company is repaid from the proceeds, along with interest and fees.

6. No repayment if unsuccessful: If the plaintiff loses the case, they generally do not owe any repayment.

Why it’s used:

Financial hardship:

It helps plaintiffs cover living expenses, medical bills, and other costs while waiting for their case to resolve.

Negotiating Leverage:

It can provide financial stability, reducing pressure to settle quickly for a lower amount due to financial hardship.

Access to legal representation:

It can help plaintiffs afford legal representation and pursue their claims.

Key considerations:

Interest and fees: Be aware of the interest rates and fees associated with pre-settlement funding, as they can be higher than traditional loans.
Reputable companies: Choose a reputable funding company with transparent terms and conditions.
Legal advice: Consult with your attorney about the implications of pre-settlement funding and whether it’s the right option for your situation.

First Capital, through our Legal Funding Department, is a trusted legal funding partner offering personalized pre-settlement funding for plaintiffs, and other litigation financing services. If your case is still ongoing, you may be eligible for legal funding based on the details of your lawsuit. Contact us today to see how we can help.

First Capital Financial Group, LLC, our Divisions and/or Departments, are not Attorneys and do not give legal advice. Nothing in this post or on our website should be considered legal advice. If you need legal advice, you should seek that advice from a qualified legal professional.