California Pre-Settlement Funding

California Pre-Settlement Funding: What It Is, What It Costs, and Whether You Need It

Pre-settlement funding in California is a cash advance against the proceeds of your pending personal injury lawsuit. You receive money now and repay it from your settlement later. If your case does not result in a recovery, you owe nothing.

This page explains how pre-settlement funding actually works under California law, what California’s newly signed AB 931 means for your rights, what the advance genuinely costs, and how to decide whether it makes financial sense for your situation. It also covers when it probably does not make sense.

ECO Pre-Settlement Funding has worked with injury victims since 2010. Call 800-961-8924 for a free case review. But read through this first.

What Is Pre-Settlement Funding?

Pre-settlement funding goes by several names: lawsuit loan, legal funding, litigation funding, or settlement advance. Despite the word “loan,” California law now treats it differently. Assembly Bill 931, signed by Governor Gavin Newsom on October 10, 2025, defines a consumer legal funding transaction as a company purchasing a consumer’s contingent right to receive a portion of their future settlement proceeds. That is a purchase of a future asset, not a loan.

The practical difference matters. With a traditional loan, you repay regardless of outcome. With non-recourse pre-settlement funding, you only repay if your case results in a recovery. If you lose, you owe nothing and your personal assets are never at risk. The funding company’s only recourse is against your settlement proceeds.

Why Is It Sometimes Called a “Lawsuit Loan”?

The term is widely used in advertising and searches even though it is technically inaccurate under California law. The product is legally classified as a non-recourse purchase. You will see both terms used interchangeably throughout the industry. What matters is whether your specific contract is truly non-recourse, which AB 931 now requires it to be.

California’s New Law: What AB 931 Means for You

California previously had almost no consumer protections specifically governing pre-settlement funding. That changed when Governor Newsom signed AB 931 on October 10, 2025. The law, which took effect immediately, was sponsored by the Consumer Attorneys of California and is codified under the State Bar Act.

Key protections AB 931 now gives California plaintiffs:

Contracts must be written in plain language. Your funding agreement cannot rely on fine print or legal jargon to obscure what you are agreeing to. The law requires language an ordinary consumer can understand without professional guidance.
All fees must be itemized in the contract. The agreement must state the total amount you will receive and provide an itemized list of every charge. No hidden fees.
Charges are capped at 36 months. The law prohibits fees from accruing beyond 36 months from the funding date. If your case takes longer, the cost stops growing at the 36-month mark.
Five-day cancellation right. You have five days after signing to cancel the agreement and return the funds without penalty.
No attorney referral fees. Funding companies cannot pay commissions or referral fees to your attorney or law firm. This eliminates a conflict of interest that existed under the prior unregulated environment.
No compound interest. AB 931 eliminates compounding interest structures, which previously caused costs to escalate dramatically in long cases.
Attorney acknowledgment required. Your attorney must sign an acknowledgment confirming they have not received a referral fee and will disburse funds in accordance with the contract. A contract without this acknowledgment is void.
Funding company cannot influence your case. The law explicitly prohibits funding companies from directing litigation strategy, settlement timing, or any legal decisions. Your attorney retains complete control.
Penalties for violations. AB 931 authorizes civil enforcement including statutory damages up to $10,000 per violation, plus attorney fees and the right to void the contract entirely.

This is a meaningful shift. Before AB 931, California plaintiffs had little legal recourse if a funding company used aggressive or misleading terms. The law now gives you clear rights and enforcement mechanisms.

ECO Pre-Settlement Funding operates in compliance with AB 931. All of our California agreements include the required disclosures, fee itemization, and attorney acknowledgment forms.

What Pre-Settlement Funding Actually Costs in California

This is the section most funding websites skip or bury. It is the most important thing to understand before applying.

How Rates Work

Funding companies charge more than a bank loan because they take real risk. If your case fails, they lose everything they advanced. That risk is priced into the rate. Rates in California are typically quoted as a monthly percentage of the funded amount. Under AB 931, compounding interest is now prohibited, which means your cost grows at a predictable, linear rate rather than accelerating exponentially over time.

The total cost depends almost entirely on how long your case takes to resolve. A case that settles in six months will cost significantly less than the same advance on a case that runs two years.

Here is a concrete illustration of what different timelines cost at common rates:

Funding Amount	Monthly Rate (Simple)	Repayment at 12 Months	Repayment at 24 Months	Repayment at 36 Months (cap)
$10,000	2.5%	$13,000	$16,000	$19,000
$10,000	3%	$13,600	$17,200	$20,800
$10,000	3.5%	$14,200	$18,400	$22,600

These are illustrative examples using simple interest only, as required by AB 931 in California. Your actual rate, specific fees, and case timeline determine real cost. Always request a written itemized payoff schedule before signing anything.

Four Questions to Ask Before Signing

AB 931 requires written disclosure of all fees, but you should still ask these questions explicitly before signing:

What is my exact total payoff at 12, 24, and 36 months, in writing?
Are there any charges beyond the stated monthly rate, including origination or administrative fees?
Is there a cap on the maximum total I can owe? (Under AB 931, fees stop accruing at 36 months.)
What happens if my case settles for less than the projected amount?

When the Cost Makes Financial Sense

Pre-settlement funding can be a rational financial decision when the alternative is accepting a settlement you know is too low because you cannot afford to hold out. Insurance adjusters are aware of plaintiffs’ financial situations. A plaintiff who can genuinely wait tends to recover more than one under financial pressure. If a $12,000 advance gives your attorney the time to negotiate a settlement that is $50,000 higher than the insurer’s opening offer, the cost is justified.

When the Cost Does Not Make Sense

Pre-settlement funding is not the right choice in every situation. Consider other options first if:

Your case is likely to settle in less than six months. Short timelines reduce the financial benefit and may not justify the cost.
Your expected net recovery after attorney fees and liens is modest. If you expect to net $18,000 and you advance $5,000, the repayment could consume a significant share of what you take home.
You have other options available. Personal loans, borrowing from family, negotiating payment deferrals with creditors, or California public assistance programs may cost less and carry none of the case-specific risks.
Your attorney expects the case to resolve quickly. They know the realistic timeline better than any funding company does. Take their assessment seriously.

California’s Legal Landscape: Why Cases Take as Long as They Do

Typical Personal Injury Case Timelines

Personal injury cases in California vary widely in how long they take. A straightforward car accident with undisputed liability, clear documentation, and a cooperative insurer can settle in three to six months through direct negotiation. Cases involving contested liability, serious permanent injuries, uninsured motorists, or multiple defendants regularly run 12 to 36 months. Medical malpractice cases in California, which carry a separate three-year statute of limitations (or one year from discovery), are among the longest-running personal injury matters in the state and often take three to five years to resolve.

The Judicial Branch of California’s 2025 Court Statistics Report covers data through fiscal year 2023-24. Civil case filings across California superior courts have remained high following pandemic-era backlogs, and many superior courts in high-population counties continue to operate with significant pending caseloads. Los Angeles Superior Court, which handles the highest civil caseload volume of any trial court in the United States, routinely schedules civil trial dates 18 to 30 months after a case is filed. Similar dynamics play out in Alameda, San Diego, and Sacramento counties.

California Is a Fault State for Auto Accidents

Unlike New Jersey or Michigan, California does not use a no-fault auto insurance system. When you are injured in a car accident in California, you pursue compensation from the at-fault driver’s insurance directly. You are not required to first exhaust your own insurance coverage before filing a claim against the other driver.

2025 Insurance Update: Senate Bill 1107, effective January 1, 2025, increased California’s mandatory minimum bodily injury liability limits to $30,000 per person and $60,000 per accident, up from the previous $15,000/$30,000 minimums that had not been updated in decades. Property damage minimums increased to $15,000. This matters because the prior limits were widely acknowledged as inadequate for serious injuries in California, where a single emergency room visit can exceed the old per-person limit. For funding applicants, higher minimum coverage generally means more available proceeds in cases where the at-fault driver carried only state-minimum insurance.

California’s Pure Comparative Negligence Rule

California follows pure comparative negligence, established by the California Supreme Court in Li v. Yellow Cab Co. (1975) and codified in California Civil Jury Instructions (CACI) 405. Unlike the modified comparative negligence used in New Jersey and many other states, California’s rule has no fault threshold. You can recover damages regardless of how much of the accident was your fault. If you were 80% responsible for a collision, you can still recover 20% of your damages from the other party.

In practice, this means partial fault does not disqualify you from pre-settlement funding. What matters to a funding company is the expected recoverable value after your percentage of fault is applied, not whether you share some responsibility.

California Statute of Limitations

Under California Code of Civil Procedure Section 335.1, most personal injury lawsuits must be filed within two years of the date of injury. Medical malpractice claims must be filed within three years of the injury or one year from when the injury was or should have been discovered, whichever occurs first. If your attorney has already filed your lawsuit, you are in the active litigation phase where pre-settlement funding applies.

One important note for California cases: certain special rules apply when the defendant is a government entity. Claims against a public agency must follow the California Government Claims Act, which requires filing an administrative claim within six months of the incident before a lawsuit can be filed. These cases have different funding timelines.

The Northern District of California Disclosure Rule

If your case is in federal court in the Northern District of California, that court’s local rules require disclosure of third-party litigation funding arrangements in class actions. For individual personal injury cases in state superior court, there is no comparable mandatory disclosure rule, though the discoverability of funding agreements in individual cases remains an evolving legal question in California. Discuss this with your attorney if it is a concern.

Who Qualifies for Pre-Settlement Funding in California

Basic Requirements

Approval is based on your case, not your personal financial history. You generally need:

An active personal injury lawsuit filed in a California superior court or federal court, or in some situations a strong pre-litigation claim with an attorney actively negotiating with an insurer.
Attorney representation on a contingency fee basis. Under AB 931, your attorney must sign an acknowledgment as part of the funding contract.
Clear liability and documented damages. Evidence that someone else’s negligence caused your injury, and quantifiable losses resulting from it.

No credit check, no employment verification, no income threshold.

Case Types ECO Funds in California

Motor vehicle accidents: Car crashes, rideshare accidents (Uber, Lyft), commercial truck accidents, motorcycle accidents, pedestrian accidents, and bicycle accidents on California roads including the I-5, I-405, Highway 101, and other high-incident corridors.
Premises liability: Slip and fall injuries at retail stores, apartment complexes, restaurants, parking structures, and private property under California Civil Code Section 1714.
Medical malpractice: Surgical errors, misdiagnosis, medication errors, and birth injuries. Note the separate three-year/one-year statute of limitations.
Product liability: California applies strict liability to defective products under the doctrine established in Greenman v. Yuba Power Products (1963). Defective consumer products, pharmaceutical injuries, and defective vehicle components qualify.
Workers’ compensation third-party claims: If your workplace injury involved a negligent third party separate from your employer, such as a subcontractor, equipment manufacturer, or property owner, that civil lawsuit may qualify. Standalone workers’ comp administrative claims typically do not.
Wrongful death: Cases brought by the estate or surviving family members of an accident victim.
Dog bites: California Civil Code Section 3342 imposes strict liability on dog owners for bites, regardless of prior knowledge of the animal’s behavior.
Employment discrimination and harassment: Certain employment civil claims may qualify depending on case specifics. Contact us to discuss.

Who Does Not Qualify

You likely will not qualify if:

You do not have an attorney representing you on contingency.
Liability is genuinely unclear or heavily contested with minimal evidence supporting your position.
Your case has already settled or a final judgment has been entered.
You are the defendant rather than the plaintiff.
Your matter is a standalone workers’ compensation administrative claim without a third-party civil component.
Your case involves a government entity defendant and you have not yet completed the Government Claims Act process.

We will tell you directly if your case does not qualify.

How the Application Process Works

Call 800-961-8924 or apply online. The application takes about five minutes and does not ask for credit history or employment records.

After you apply, our underwriting team contacts your attorney to verify case details, confirm the lawsuit is active, and assess the strength of the claim. We work through your attorney only and do not contact opposing counsel, the insurer, or the court directly.

Once approved, you receive a funding agreement that meets AB 931’s requirements: plain language, itemized fees, no compound interest, the 36-month accrual cap, and a five-day cancellation window. Your attorney will sign the required acknowledgment. After you sign, funds are sent by direct deposit, wire transfer, or overnight check. Most applicants receive funds within 24 hours of signing.

Funding amounts at ECO range from $500 to over $500,000. The amount you qualify for depends on your case’s estimated net settlement value after attorney fees and any existing liens. Most funding companies advance between 10 and 20 percent of expected net recovery.

Your Attorney’s Role

Under AB 931, your attorney must sign a contract acknowledgment confirming they have not received and will not receive a referral fee from the funding company. A contract without this acknowledgment is void under California law. This is a direct consumer protection: it means your attorney cannot have a financial interest in steering you toward any particular funding company.

Your attorney is not required to approve of your decision to seek funding. Some attorneys advise against it based on cost concerns or confidence in a quick resolution. Others recognize that funding allows financially pressured clients to hold out for fair outcomes in cases that drag on. The decision ultimately belongs to you.

One thing that does not change when you accept funding: your attorney retains complete control of litigation strategy and settlement decisions. AB 931 makes this legally explicit. If a funding company ever attempts to influence how your case is managed, that is a violation of California law and grounds to void the contract.

Typical Settlement Ranges and Funding Amounts by Case Type in California

Case Type	Typical California Settlement Range	Typical Funding Range
Car accident (serious injury)	$50,000 to $500,000+	$2,500 to $50,000
Slip and fall / premises liability	$20,000 to $300,000	$1,500 to $30,000
Medical malpractice	$250,000 to $5,000,000+	$10,000 to $250,000
Rideshare accident (Uber/Lyft)	$50,000 to $1,000,000+	$3,000 to $75,000
Dog bite	$30,000 to $200,000	$2,000 to $20,000
Construction accident (third-party)	$100,000 to $2,000,000+	$5,000 to $150,000

These ranges reflect general patterns in California civil litigation outcomes and are not guarantees or predictions. Actual settlement value depends entirely on the specific facts of your case, the severity and permanence of your injuries, available insurance coverage, and the application of California’s pure comparative negligence rule to your percentage of fault.

Cities and Counties We Serve in California

ECO serves plaintiffs across all of California’s 58 counties. We work with cases filed in all California Superior Courts as well as the federal Central, Northern, Eastern, and Southern Districts of California. Counties where we most frequently work include:

Los Angeles County: Los Angeles, Long Beach, Pasadena, Glendale, Torrance, Burbank, Compton, Pomona, El Monte.
San Diego County: San Diego, Chula Vista, Oceanside, Escondido, El Cajon.
Orange County: Anaheim, Santa Ana, Irvine, Huntington Beach, Garden Grove.
Riverside County: Riverside, Moreno Valley, Corona, Temecula, Murrieta.
San Bernardino County: San Bernardino, Fontana, Ontario, Rancho Cucamonga.
Santa Clara County: San Jose, Sunnyvale, Santa Clara, Mountain View.
Alameda County: Oakland, Fremont, Berkeley, Hayward.
Sacramento County: Sacramento, Elk Grove, Roseville, Folsom.
Fresno County: Fresno, Clovis, Visalia.
San Francisco County: San Francisco.

Frequently Asked Questions

Does pre-settlement funding affect my credit score?

No. Pre-settlement funding is classified as a non-recourse purchase of a contingent asset, not a loan. We do not check your credit and we do not report to credit bureaus. Your credit score is irrelevant to whether you qualify and is never affected by applying or receiving funding.

What does AB 931 actually change for me as a California plaintiff?

Before AB 931, California had no specific law governing pre-settlement funding contracts. Funding companies could use compound interest, buried fees, and attorney referral arrangements. AB 931, signed in October 2025, changes that. It bans compound interest, caps fee accrual at 36 months, requires plain-language contracts with itemized fees, mandates a five-day cancellation window, prohibits attorney referral payments, and gives you civil enforcement rights including the ability to void a non-compliant contract and recover up to $10,000 per violation.

What happens if my case settles for less than expected?

You owe only what your net settlement proceeds cover. Net proceeds means your total settlement minus attorney fees and any existing medical or other liens. If the remaining amount is less than your total payoff to ECO, we absorb the difference. You cannot be pursued personally for any remaining balance. This is the defining feature of non-recourse funding.

Can I get additional funding if I already have an advance from another company?

Sometimes. Additional advances on the same case are evaluated by reviewing the existing lien against your case and the remaining expected net recovery. This is called stacking and is more complex than a first advance. We assess it case by case.

I was partially at fault for my accident. Can I still qualify?

Yes, in many situations. California’s pure comparative negligence rule means you can recover damages even with significant shared fault. A funding company evaluates the expected recoverable value after your fault percentage is applied. Partial fault reduces the funding amount you may qualify for but does not automatically disqualify you.

Does the defense find out I received pre-settlement funding?

For cases in California state superior court, there is no general rule requiring disclosure of pre-settlement funding in individual personal injury cases. For cases in the Northern District of California federal court, the local rules do require disclosure of third-party funding in class actions. For individual cases, the question of whether a defendant can compel disclosure through discovery is an unresolved area of California law. Talk to your attorney about this if it concerns you.

Do California workers’ compensation cases qualify?

Standalone California workers’ compensation administrative claims generally do not qualify because of how recovery is structured through the Division of Workers’ Compensation system. However, if your workplace injury also involved negligence by a third party, such as a property owner, equipment manufacturer, or a contractor on a job site, that separate civil lawsuit may qualify. Third-party construction accident claims in California are among the cases we fund.

What is the most important thing to check before signing a funding agreement in California?

Under AB 931, verify that your contract contains: a complete itemization of all fees, a stated cap on accrual at 36 months, no compound interest, a five-day cancellation window, and your attorney’s signed acknowledgment. A contract missing the attorney acknowledgment is void under California law. Keep a copy of your signed agreement.

How quickly can I receive funds after applying?

Most approvals are completed within 24 to 48 hours of receiving complete information from your attorney. Cases involving complex liability or government-entity defendants may take longer. You are under no obligation to accept any offer once you receive it.

My lawsuit has not been filed yet. Can I still apply?

Some funding companies require a formally filed lawsuit. ECO evaluates pre-litigation situations where an attorney is actively involved, liability is reasonably clear, and insurer negotiations are ongoing. Call 800-961-8924 to discuss whether your situation qualifies.

Should I borrow the maximum amount I qualify for?

No. Borrow only what you need to cover essential expenses while your case is pending. Every dollar you advance is a dollar you repay with fees at settlement. Over-borrowing is the most common mistake plaintiffs make with pre-settlement funding. A reputable company will tell you this directly rather than encourage you to take the maximum.

Alternatives to Pre-Settlement Funding Worth Exploring First

Pre-settlement funding is not the only option for plaintiffs facing financial pressure during litigation. Before applying, consider whether any of these alternatives might work for your situation:

Personal loans from a bank or credit union: If you have workable credit, personal loans carry significantly lower rates than pre-settlement funding and are fully protected by California’s lending laws. The difference is that repayment is required regardless of how your case ends.
Medical lien arrangements: Many California medical providers will treat injury victims on a lien basis, agreeing to wait for payment until your case settles. This reduces your immediate cash need without requiring a funding advance.
Negotiating directly with creditors: Landlords, utility companies, and medical billing departments often agree to reduced payments or deferrals for injury victims in active litigation. You may need to explain your situation and provide documentation of your case.
California public assistance programs: Medi-Cal covers medical costs for income-eligible residents. The California Housing Is Key program and county-level rental assistance programs may address housing costs. The Low Income Home Energy Assistance Program (LIHEAP) provides utility assistance. These programs do not require repayment at all.
Disability or workers’ comp benefits: If your injury resulted from a workplace accident, California workers’ compensation provides temporary disability payments while your claim is pending, separate from any civil lawsuit.

Pre-settlement funding is a legitimate option when other avenues are genuinely unavailable or insufficient and when holding out financially would allow your attorney to secure a materially better outcome. It is not the right starting point for every plaintiff.

How to Evaluate Any Pre-Settlement Funding Company in California

AB 931 raised the baseline for all California funding companies, but the law’s requirements are a floor, not a ceiling. When comparing options:

Confirm the contract is AB 931 compliant. It must include itemized fees, plain language, a 36-month accrual cap, no compound interest, a five-day cancellation right, and an attorney acknowledgment section.
Ask for the written payoff schedule at 12, 24, and 36 months before signing. A company that won’t provide this in writing is not operating transparently.
Verify no attorney referral fees exist. AB 931 bans these, but ask directly and confirm it is stated in the contract.
Check for prepayment penalties. AB 931 prohibits prepayment penalties. If your case settles early, you should be able to repay early without additional fees.
Check complaint history. The California Department of Financial Protection and Innovation (DFPI) and the Better Business Bureau are reasonable starting points for checking a company’s complaint record.
Look for industry association membership. The American Legal Finance Association (ALFA) and the Alliance for Responsible Consumer Legal Funding (ARC) maintain ethical practice standards for member companies that often exceed minimum legal requirements.

Apply for Pre-Settlement Funding in California

If you have read through this page and believe pre-settlement funding is the right option for your situation, call 800-961-8924 or apply online. We review every case at no cost with no obligation to accept any offer we make.

If you are still unsure, talk to your attorney first. They know whether your case is likely to resolve in months or years, and that single piece of information matters more than anything else in deciding whether funding makes sense for you.

This page provides general information about pre-settlement funding and California law. It does not constitute legal or financial advice. Eligibility is determined on a case-by-case basis. California Assembly Bill 931 information is current as of the date this page was written. Consult your attorney before entering into any funding agreement. ECO Pre-Settlement Funding is not a law firm and does not provide legal counsel.

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