Understanding Pre-Settlement Funding and How It Works

Pre-settlement funding is a relatively new form of financing that offers you funds prior to a pending legal settlement. It allows you to get cash before you receive a payment from a personal injury, workers’ compensation, medical malpractice, or commercial litigation case. Pre-settlement funding gives you access to funds for living expenses, medical bills, or any other expenses you may incur due to an accident or injury.

The concept of pre-settlement funding is to relieve the financial strain of any legal proceedings. It can provide an important source of immediate funds that can help you through the court process and make sure you’re able to retain a good attorney and gain a favorable outcome. Pre-settlement funding eliminates the risk of not being able to cover all costs associated with your case after the attorney fees have been paid.

Before applying for pre-settlement funding, you should resolve any outstanding financial obligations that may be part of a settlement. This includes medical bills, funeral expenses, lost wages due to disability and other out-of-pocket costs incurred due to injury. If you’ve already been paid on any of these expenses, you should be able to deduct them from the total that you’re seeking.

The pre-settlement funding company will then typically enter into a contract with the plaintiff to be paid when their case is settled and the plaintiff receives a portion of the proceeds. This contract will generally include: a fee for the services provided, an estimate of the total settlement or jury award, the expected timeline for payment, the terms of payment including any potential future payments and conditions, and the requirements for repayment should the settlement fail to occur.

The process of obtaining pre-settlement funding can be relatively straightforward with most companies. Typically, applicants will need to provide the funding company with their case information, a letter from their attorney detailing the legal basis of their claim and any economic losses that resulted from the injury, and a financial report detailing the present financial strain created by the case.

Before committing to pre-settlement funding, it’s important to understand the terms of the contract, the fees involved, and the estimated timeline of payment. It’s also important to determine the total amount of funds needed to cover the legal fees and other costs associated with the case. Pre-settlement funding companies may have differing rules and procedures, so be sure to read all paperwork thoroughly and ask any necessary questions before signing.

One of the advantages of pre-settlement funding is the advantage of time. By receiving funds before the settlement is finalized, plaintiffs can avoid the need to accept a less-than-favorable settlement terms or the potential rush to find alternate sources of funding when a settlement is reached. Additionally, pre-settlement funding can provide access to funds when regular borrowing may be unavailable due to the complexity of the case.

A key element of pre-settlement funding is its non-recourse nature. This means that the plaintiff is not required to repay the funding company unless their case is successful. In the event that your case does not reach a successful resolution, the pre-settlement funding company is obligated to shoulder the loss. This can provide you with peace of mind as you wait for a settlement.

It is important to note that pre-settlement funding is not a lawsuit loan. You do not need to borrow money from the funding company, but instead you are granted a percentage of your estimated potential settlement or jury award so that you can use the funds before the case is resolved. Pre-settlement funding can offer a lifeline for unexpected expenses associated with a personal injury or loss of wages due to the court proceedings.

In conclusion, pre-settlement funding can provide a distinct advantage to those preparing to pursue legal action. With access to funds before settling, more favorable terms may be obtained, costs of proceedings can be covered, and the pressure of financial stress can be alleviated during the court process. It can be a great option for those needing access to funds before the outcome of their case. Be sure to understand the full details of your arrangement and the estimated timeline of payment before entering into a pre-settlement funding agreement.