If you’re waiting for a personal injury lawsuit to settle and running out of money, pre-settlement funding might help. But before you apply, it makes sense to understand how the process actually works.
This article walks through the process from application to repayment, including what funding companies look at when evaluating cases, how quickly you can get money, and what happens when your lawsuit eventually resolves.
Why Lawsuit Funding Exists
Personal injury cases usually take one to three years to settle. Some resolve faster. Others drag on much longer if liability is disputed or injuries are severe.
During that time, you’re dealing with medical bills that insurance may not cover yet, lost income if you can’t work, and regular living expenses that don’t pause while your attorney negotiates. The financial pressure builds the longer your case takes.
Insurance companies know this. That’s why settlement offers sometimes come early in a case – they’re counting on plaintiffs accepting less money now rather than waiting for fair compensation later.
Pre-settlement funding exists to remove that pressure. It gives plaintiffs access to money before their case settles, based on what the lawsuit is expected to recover.
How the Application Process Works
Step 1: Initial Contact and Case Review
When you apply for pre-settlement funding, the company doesn’t look at your credit score or employment history. They evaluate your lawsuit itself.
Most companies ask for basic information about your case:
- Type of injury and when it happened
- Who you’re suing and why
- Your attorney’s contact information
- How far along your case is
- What you expect the case to settle for
This initial review helps them decide whether your case is strong enough to qualify. Cases with clear liability and well-documented injuries are more likely to get approved than disputed claims.
Step 2: Attorney Verification
Here’s where lawsuit funding differs from traditional loans: the funding company needs to work directly with your attorney.
Your lawyer has to agree to cooperate with the funding company and authorize repayment from your settlement when the case resolves. Some attorneys refuse to work with funding companies because they think the fees are too high. Others are fine with it if you understand what you’re signing.
The funding company will contact your attorney to verify:
- The case details you provided are accurate
- Your attorney believes the case has merit
- They’re willing to facilitate repayment from settlement proceeds
- There are no liens or other complications that would prevent repayment
This step protects both you and the funding company. It ensures the case evaluation is based on accurate information, and it prevents situations where you might accidentally agree to funding your attorney thinks is a bad idea.
Step 3: Case Evaluation and Approval
Once your attorney cooperates, the funding company evaluates your case more thoroughly. They’re trying to answer one main question: how likely is this case to result in a settlement large enough to repay the advance plus fees?
They typically look at:
Liability strength. How clear is it that the defendant caused your injury? Cases with obvious fault (rear-end collisions, slip-and-falls on clearly hazardous property) are easier to fund than cases where fault is disputed.
Injury severity and documentation. Medical records that show serious, well-documented injuries supported by physician reports are more fundable than minor injuries or subjective complaints.
Defendant’s ability to pay. Is there insurance coverage? If it’s a lawsuit against an individual, do they have assets to satisfy a judgment? Defendants with no resources can’t pay settlements.
Expected timeline. Cases that are close to settling are less risky for funding companies than cases that just started. The longer they wait for repayment, the higher their risk.
Settlement range estimates. Based on similar cases in your jurisdiction, what’s a reasonable expected settlement? This determines how much they can advance.
Most applications are approved or denied within 24 to 48 hours, assuming the attorney responds.
Step 4: Funding Offer and Contract
If your case qualifies, the funding company makes an offer. This isn’t negotiable at most companies, though some will adjust rates for particularly strong cases or large funding amounts.
The contract will specify:
- How much you’re receiving
- What the fee structure is (usually a percentage or simple interest)
- When and how repayment happens
- What happens if your case loses
Read this carefully. Make sure you understand:
- What you’ll owe if your case settles in 6 months versus 2 years
- Whether fees are capped at a maximum amount
- Whether there are any hidden charges
- What your attorney thinks of the terms
You’re under no obligation to accept the offer. If the terms don’t work for you, you can decline without penalty.
Step 5: Receiving Your Money
Once you sign the contract, funding usually arrives within 24 hours. Most companies offer direct deposit, wire transfer, or overnight check delivery.
Funding amounts typically range from $500 to $100,000 depending on your case’s expected value. Larger advances are possible for high-value cases, but most plaintiffs receive between $1,000 and $25,000.
You can use the money however you need to. There are no restrictions. Most people use it for rent, utilities, medical bills, groceries, or other basic living expenses while waiting for their case to settle.
What Happens While Your Case Continues
After you receive funding, there’s nothing else you need to do until your case resolves.
There are no monthly payments. You don’t need to send updates to the funding company. You just continue working with your attorney on your case while the funding helps you manage financially.
If your case takes longer than expected, fees may continue accruing depending on your contract terms. Some companies cap fees at a maximum amount regardless of how long your case takes. Others don’t.
If you run out of money before your case settles, you can sometimes apply for additional funding. Each new advance comes with new fees, so the total cost keeps climbing.
How costs grow the longer a case takesHow Repayment Works When Your Case Settles
When your lawsuit finally settles or reaches a verdict, repayment happens automatically through your attorney.
Here’s the typical process:
Your attorney receives the settlement check. In most personal injury cases, the settlement check goes directly to your lawyer, not to you.
The funding company gets repaid first. Your contract with the funding company includes an assignment that legally requires settlement funds to repay the advance before you get paid. Your attorney is obligated to honor that assignment.
Your attorney deducts their contingency fee. This typically applies to the full settlement amount before the funding company gets repaid, so their fee isn’t reduced by your use of funding.
You receive what’s left. After the funding company and your attorney are paid, you get the remaining settlement proceeds.
Let’s look at an example:
Your case settles for $50,000. You received $5,000 in pre-settlement funding, and fees have grown to $7,500 over the 18 months your case took to settle. Your attorney’s contingency fee is 33%.
- Settlement: $50,000
- Attorney fee (33%): -$16,500
- Funding repayment: -$7,500
- You receive: $26,000
If your case loses or gets dismissed without recovery, you owe nothing. The funding company absorbs the loss. That’s what makes this “non-recourse” funding – repayment depends entirely on case outcome.
What Affects Your Funding Terms
Not everyone gets the same rates or amounts. Several factors influence what you’ll pay:
Case strength matters most. Strong cases with clear liability qualify for lower fees than questionable cases. If your case is risky, expect higher costs or possible denial.
Expected timeline affects cost. Cases likely to settle quickly usually get better rates than cases expected to drag on for years. The longer the funding company waits for repayment, the more they charge.
Funding amount influences rates. Some companies offer better rates for larger advances because their administrative costs are spread over more money.
Attorney quality can help. Experienced personal injury attorneys with good track records may help you qualify for better terms because funding companies trust their case evaluations.
Case type varies by company. Some funding companies specialize in car accidents. Others focus on medical malpractice or product liability. Applying to a company that regularly funds your type of case may improve your terms.
Common Questions About the Process
Can I get funding without my attorney knowing?
Technically possible at some companies, but not recommended. Your attorney has important information about your case that affects whether funding makes sense. They also need to facilitate repayment when your case settles. Going around them creates problems.
How much can I typically receive?
Most companies advance between 10% and 20% of your case’s expected settlement value. If your case is projected to settle for $100,000, you might qualify for $10,000 to $20,000. Higher percentages are possible for very strong cases.
What if I change attorneys after getting funding?
You need to notify the funding company immediately. Your new attorney will need to agree to honor the repayment assignment. Most funding companies require this in writing before allowing the attorney switch.
Can I pay back the funding early to reduce fees?
It depends on your contract. Some companies allow early repayment at reduced rates. Others don’t. Check your agreement or ask before assuming you can pay early.
What happens if the defendant appeals after I win?
Appeals delay payment. Your contract probably addresses this. Many funding companies won’t get repaid until the appeal resolves, which means fees keep accruing during the appeal period.
For more answers about the funding process and what to expect, visit our frequently asked questions page.
Who Should Consider Lawsuit Funding
Pre-settlement funding isn’t right for everyone. It makes the most sense when:
- You’re facing immediate financial crisis while your case progresses
- You’re considering accepting a lowball settlement purely because you need money now
- You have a strong case but uncertain timeline
- You’ve exhausted other options like family help or traditional loans
- The financial stress is affecting your health or recovery
It makes less sense when:
- Your case is weak or liability is heavily disputed
- You’re already close to settling and can hold out a bit longer
- You have other financial resources you haven’t tapped yet
- Your attorney strongly advises against it
- The fees would consume too much of your expected settlement
What Lawsuit Funding Actually Costs
Fees vary widely by company and case, but most charge between 2% and 4% per month (24% to 48% annually). This isn’t simple interest – it’s usually structured as a fee or return based on how long your case takes.
Some companies use tiered pricing:
- 15% fee if repaid within 6 months
- 30% if repaid between 6-12 months
- 40% if it takes longer than 12 months
Others use compounding structures where fees grow monthly or quarterly.
A $10,000 advance that takes 18 months to repay might cost you $13,000 to $15,000 depending on the fee structure. That’s expensive compared to traditional financing; and it’s important to understand that before applying.
Ask specifically about:
- Whether fees compound
- Whether there’s a maximum cap regardless of timeline
- What you’d owe at 6 months, 12 months, 18 months, and 24 months
- Whether there are application fees or hidden charges
Making an Informed Decision
Before applying for pre-settlement funding, talk to your attorney. They know your case better than anyone and can tell you whether they think it makes financial sense given your case’s likely settlement range and timeline.
If you decide to apply, compare offers from multiple companies. Rates and terms vary significantly. One company might charge 30% while another charges 45% for the same case and timeline.
Read contracts carefully before signing. Make sure you understand exactly what you’re agreeing to and what you’ll owe under different scenarios.
And remember: this is non-recourse funding. If your case doesn’t recover money, you owe nothing. That protection is valuable, but it also explains why the fees are high – the funding company is taking real risk that your case might lose.
Most importantly, try not to let financial pressure push you into accepting an inadequate settlement. That’s the whole point of lawsuit funding – giving you the financial breathing room to wait for fair compensation rather than settling out of desperation.
Whether funding is actually worth the costIf you’re considering pre-settlement funding and want to discuss your specific situation, call ECO Pre-Settlement Funding at 800-961-8924 for a free consultation. There’s no obligation, and we can help you understand whether funding makes sense for your case.