Will receiving pre-settlement funding affect my settlement offer?

Pre-settlement funding, otherwise known as a lawsuit loan, is a way of obtaining capital while you’re in the middle of a lawsuit. It’s an advance on your pending settlement and can be used to pay for medical expenses, bills, and other costs of living that have been incurred as a result of your lawsuit. But how does pre-settlement funding affect your settlement offer?

The answer is: it depends. Pre-settlement funding can be beneficial if you’re in dire need of cash, as it can help you cover your living expenses and other costs associated with a lawsuit. However, it’s important to be aware of the potential consequences receiving pre-settlement funding might have on your settlement offer.

If your settlement is based on a “contingent fee” structure, the pre-settlement funding could eat into the proceeds of your settlement and significantly reduce your available compensation. When you use pre-settlement funding, you’re essentially borrowing money at a high rate of interest, and that money must be repaid when you receive your settlement. Depending on the amount of funding you receive, this could result in a substantial reduction in the amount you receive from your settlement.

In addition, pre-settlement funding may also influence a settlement offer from the other party. If you receive pre-settlement funding, it’s likely the other party will see this as an indication that you’re financially desperate, and may offer you a smaller settlement.

Because of the potential downside of receiving pre-settlement funding, it’s important to fully understand the implications before proceeding. Consider speaking with a litigation expert to ensure you fully understand the short and long-term consequences of taking a lawsuit loan.

It’s also essential that you remain transparent about your pre-settlement funding with the other parties involved in your case. Remember, pre-settlement funding is a loan, and if you don’t disclose this clearly, you may find yourself in debt if the other party decides to take legal action against you.

In summary, while pre-settlement funding can offer you much needed monetary relief while you’re going through a lawsuit, it can negatively impact your settlement offer if you’re not careful. Take your time and consider the implications of your decision, as this will help you make sure you get the most out of your settlement.