What Is Pre-Settlement Funding? The Basics Explained


Did you know that US state trial courts handle more than 100 million legal case filings every year? That’s on top of the estimated 400,000 cases filed annually in US federal trial courts!

Those statistics demonstrate how rampant crimes are in the nation. It also proves how so many of the country’s people suffer in the hands of others each passing day. Personal injury case filings in federal courts alone range between 20,000 and 50,000 each month.

Now that you’re a plaintiff yourself, you may be wondering how to fund your lawsuit. Pre-settlement funding may be a viable option in this case.

We’ll discuss the basics of such lawsuit financing services below, so be sure to read on.

What Is Pre-Settlement Funding?

Pre-settlement funding is also known as lawsuit loans or litigation funding. It provides a cash advance on pending lawsuits based on the anticipated settlement. Claimants, plaintiffs, and even lawyers can apply for such financing services.

How Does It Work?

Applying for litigation funding is much like taking out a loan for a lawsuit. However, the lender is specifically a pre-settlement funding company and not a bank. The case’s expected settlement or legal award serves as a sort of collateral.

So, when you apply for a lawsuit loan, you’re “selling” part of or all of the “interest” on your pending case. The lawsuit funding company then “buys” a portion of or the entire foreseen settlement. The financing service pays you for the purchase of the interest in cash.

In this way, litigation funding lets you tap your settlement even before the court awards it to you. Best of all, pre-settlement financing is a form of a “non-recourse” loan. This means that you don’t have to pay it back unless you win your legal case.

Why Consider Applying for a Lawsuit Loan?

The lawsuit settlement process can take years, even a decade, to conclude. On average, though, personal injury cases can take at least one to two years. That’s still a long time, especially since your financial needs won’t wait for the case to settle.

Things could be more difficult if another person’s negligence caused your serious injury. Many accident-related injuries can take a year or up to 18 months to heal completely. You may be able to go back to work, but your employer may cut your salary due to a reduced workload.

A lawsuit loan can furnish you with the funds you need while you wait for your legal award. What’s more, the entire application process can take less than a week. Once you get approved for the loan, you can expect the funds in just 24 to 48 hours.

What’s more, most types of personal injury cases qualify for litigation funding. You can know more here regarding the types of lawsuits you can get financing for.

Pre-Settlement Funding Can Help Tide You Over

As you can see, pre-settlement funding can help you get through a tough legal battle. It can finance not only your ongoing lawsuit but also your personal and health needs. Best of all, you can apply so long as you have retained an attorney and that you have an active lawsuit.

Interested to learn more about the legal system? You’re more than welcome to stay and browse our site’s other law-related posts!

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