CloudLex logo

Everything You Need To Know About Pre-Settlement Funding

Pre-Settlement Funding

Everything You Need To Know About Pre-Settlement Funding


If you’re involved in a personal injury lawsuit, you may face financial challenges while waiting for your case to settle. Medical bills, living expenses and legal fees can quickly add up, putting pressure on you to settle for less than your case may be worth. Fortunately, pre-settlement funding is a financial option providing much-needed relief during this time. This article will explore everything you need to know about pre-settlement funding, including how it works, its benefits and the process.

Pre-settlement funding, also known as lawsuit funding or settlement funding, is a type of cash advance provided to plaintiffs in pending personal injury cases. It is not a loan but rather a non-recourse cash advance repaid from the settlement or verdict amount of the case.

One of the significant benefits of pre-settlement financing is that it provides financial support to plaintiffs who may be struggling financially due to their injuries and the legal process. Here are some key points to understand about pre-settlement funding:

Personal injury lawsuits can take months or even years to resolve. During this time, plaintiffs may face financial strain due to medical bills, rehabilitation costs and other expenses. Pre-settlement funding can provide plaintiffs with the necessary cash to cover these expenses and relieve financial stress, allowing them to focus on their recovery and their case without the pressure to settle early for less.

No credit check or employment verification

Unlike traditional pre-settlement loans, pre-settlement funding does not require a credit check or employment verification. The funding is based solely on the merits of the case and the expected settlement or verdict amount. This means that plaintiffs with poor credit or no employment can still be eligible for pre-settlement funding, making it accessible to many plaintiffs.

Leveling the playing field

Insurance companies and defendants in personal injury cases often have significant financial resources. They may use this advantage to delay the legal process or pressure plaintiffs into accepting low settlement offers. Pre-settlement funding can level the playing field by providing plaintiffs with the financial means to pursue their cases and resist the pressure to settle for less than their case may be worth.

No upfront costs or out-of-pocket expenses

Another significant benefit of pre-settlement funding is that plaintiffs have no upfront or out-of-pocket expenses. When the case is resolved, the funding company typically charges a fee or interest rate deducted from the settlement or verdict amount. This means that plaintiffs do not have to worry about making monthly payments or covering expenses out of their own pockets during the legal process.

Flexibility in using funds

Plaintiffs who receive pre-settlement funding can use the funds as they see fit. They can use the funds to cover various expenses related to their injuries and legal processes, including medical bills, rent or mortgage payments, living expenses, transportation costs, legal fees and other financial obligations. There are no restrictions on how the funds can be used, giving plaintiffs the freedom to allocate them based on their specific needs.

No risk to personal assets

Since pre-settlement funding is not a loan, it does not require any collateral or personal assets to be put at risk. The funding is solely based on the case’s potential settlement or verdict amount and is repaid from that amount. This means that plaintiffs do not have to worry about risking their personal assets, such as their home or car, to obtain the funding.

Confidentiality and privacy

Obtaining pre-settlement funding is confidential, and the plaintiff’s personal information is protected. There is no need to disclose the financing to the opposing party or the court, ensuring privacy and confidentiality throughout the legal process.

Consultation with your attorney

Before obtaining pre-settlement funding, it is crucial to consult with your attorney. Your attorney can guide whether pre-settlement funding is the right option for your case and can help you navigate the process. Working with a reputable pre-settlement funding company with experience in personal injury cases and understanding the legal complexities involved is essential.

Considerations and fees

It’s important to understand that personal injury settlement funding is not without costs. Funding companies charge fees or interest rates for providing the advance, typically deducted from the settlement or verdict amount when the case is resolved. Before proceeding, reviewing and understanding the terms and costs associated with the funding is essential.

Pre-settlement funding can provide much-needed financial relief for plaintiffs in personal injury lawsuits. It can level the playing field against well-funded defendants and insurance companies and allow plaintiffs to pursue their cases without settling for less. The fast, confidential and convenient process provides flexibility in using the funds. However, it’s crucial to consult with your attorney and carefully review the terms and fees associated with the funding before proceeding.

Pre-settlement funding may be viable if you face financial challenges during a pending personal injury lawsuit. It’s essential to work with a reputable funding company that specializes in personal injury cases and understands the legal nuances involved. By obtaining pre-settlement funding, you can alleviate financial stress, focus on recovering from your injuries and pursue fair compensation for your damages.

See CloudLex in action

Discover why thousands of PI attorneys choose CloudLex

Whether you're a new firm branching out or are an established national practice, our diverse range of custom packages caters to the specific needs of personal injury law firms, ensuring you have the precise tools to optimize your operations, increase productivity and deliver superior client experiences.

Try CloudLex