What You Need to Know About Pre-Settlement Lawsuit Funding

As litigation funding expands and adapts to the needs of consumers, it is becoming known by an increasing array of names: lawsuit loans, car accident loans, pre-settlement funding, etc. That’s because third-party funders are always developing new ways for non-recourse legal funding to help those in need.

National Law Review explains that pre-settlement funding can be a boon to those who have been hurt in an accident and have a pending case. Even if the case is a slam dunk, it will take time for a settlement or judgement to be achieved. In the interim, there are bills to pay and lost wages to contend with. This kind of funding, which does not require good credit, can provide much-needed wiggle room to plaintiffs waiting to be compensated. The caveat is that their eventual payout could be much less than it would have been if a funding agreement was not in place.

Funders use a variety of criteria when selecting who to fund:

1. Litigation often must be active and be handled by a lawyer.
2. Cases should be likely to end in a judgement for the plaintiff.
3. Personal injury cases are among the most commonly funded.
4. Client is in a funding-friendly jurisdiction.
5. Potential for a high settlement.
6. Defendant has the ability to pay an award to the plaintiff.
7. The plaintiff and attorney should both be committed to a positive outcome.

A pre-settlement advance differs from a structured settlement in a few key ways. Structured settlements benefit defendants, as they’re used when defendants cannot pay the full award at once. Specific terms may vary depending on various factors. Pre-settlement funding is provided in a lump sum before a case is settled, benefiting the plaintiff.

Given the inherent benefits to investors and plaintiffs alike, it’s likely that pre-settlement funding will continue to grow.  

As litigation funding expands and adapts to the needs of consumers, it is becoming known by an increasing array of names: lawsuit loans, car accident loans, pre-settlement funding, etc. That’s because third-party funders are always developing new ways for non-recourse legal funding to help those in need.

National Law Review explains that pre-settlement funding can be a boon to those who have been hurt in an accident and have a pending case. Even if the case is a slam dunk, it will take time for a settlement or judgement to be achieved. In the interim, there are bills to pay and lost wages to contend with. This kind of funding, which does not require good credit, can provide much-needed wiggle room to plaintiffs waiting to be compensated. The caveat is that their eventual payout could be much less than it would have been if a funding agreement was not in place.

Funders use a variety of criteria when selecting who to fund:

1. Litigation often must be active and be handled by a lawyer.
2. Cases should be likely to end in a judgement for the plaintiff.
3. Personal injury cases are among the most commonly funded.
4. Client is in a funding-friendly jurisdiction.
5. Potential for a high settlement.
6. Defendant has the ability to pay an award to the plaintiff.
7. The plaintiff and attorney should both be committed to a positive outcome.

A pre-settlement advance differs from a structured settlement in a few key ways. Structured settlements benefit defendants, as they’re used when defendants cannot pay the full award at once. Specific terms may vary depending on various factors. Pre-settlement funding is provided in a lump sum before a case is settled, benefiting the plaintiff.

Given the inherent benefits to investors and plaintiffs alike, it’s likely that pre-settlement funding will continue to grow.