Can I negotiate the terms of my pre-settlement funding agreement?

Pre-settlement funding has become an increasingly popular way for victims of accidents and injuries to cover their financial needs and expenses when their legal cases are resolving or pending. Generally, pre-settlement funding companies provide a financial advance to plaintiffs so that they can pay medical bills, living costs, or lawyers’ fees. The company issuing the advance pays the claimant a lump sum and then recoups its money from the settlement once the legal case is resolved.

Despite the widespread availability of pre-settlement funding, many people assume the terms of the funding agreement are non-negotiable. After all, most applicants are often in a precarious financial position and thus assume the agreement is a take-it-or-leave-it kind of proposition. However, depending on the situation, there may be some room for negotiation.

In insurance terms, pre-settlement funding is usually a non-recourse loan. That means the company issuing the advance is taking a risk since, by definition, it won’t be able to collect any money if the legal case is lost. This means that pre-settlement funding companies usually don’t want to be in the position of losing money on a loan; they want to recover their original advance and then earn a profit.

With that in mind, the funding agreement can often be considered a two-way negotiation, as long as the parties understand the risk involved. This doesn’t mean that pre-settlement funding companies are willing to give away their money just because a plaintiff is in a difficult financial situation. Rather, it allows for the possibility of a compromise, where the amount to be repaid is adjusted to the plaintiff’s capability of paying it back.

Additionally, there can also be an element of negotiating when it comes to the timing of the repayment. Most pre-settlement funding agreements require payment upon receipt of the claim settlement proceeds, which can come in a lump sum or installments depending on the specifics of the case. However, some pre-settlement funding companies may offer flexible repayment options with the understanding that they will receive their funds (plus interest) over a longer period.

Ultimately, before entering a pre-settlement funding agreement, it is important to understand all of your rights as a borrower and to make sure you understand the agreement’s terms. Negotiating the terms of a pre-settlement funding agreement is possible, and in some cases, may be the best approach to ensure that you are in the best possible position to repay the loan. It may also be possible to find a company that has more flexible repayment options to better suit your unique financial situation.