Pre-Settlement Funding: Is It an Answer to Someone’s Prayers? 

Statue of Themis holds scales of justice. In unfocused background, adult man signs documents.

Being involved in a lawsuit can be a traumatic experience. The lawsuit process can be time-consuming, lasting months or even years before it’s resolved, which means plaintiffs can experience persistent anguish attached to an already painful situation.

One significant problem that arises during a lawsuit is waning finances, which usually occurs when the litigation process continues for a prolonged period. Bills must be paid, living expenses must be managed, and, in most cases involving injury, the lawsuit participants may not be working. Pre-settlement funding, also known as pre-settlement lawsuit loans, law-suit cash advances, and settlement or litigation funding, provides a way to ease the stress of an imminent financial collapse by providing an immediate loan of $500 – $10MM upon approval. Any lawsuit that’s pending in court where a person is seeking to recover money, that person can apply for pre-settlement funding. In many cases, the approval can happen in 24 hours, and plans can begin immediately for building a more rational financial situation.

Benefits of Pre-Settlement Funding

The way this funding process is structured, the loan is approved, understanding that the companies offering this funding will be paid a portion of the anticipated financial settlement. Best of all, this funding tool is a no-risk loan because if the lawsuit is lost, the borrower(s) never has to pay the loan back! This funding agreement delivers money for plaintiffs and their attorneys, so while the lawsuit negotiations are bandied about in or out of court, enough money has been distributed so that no one has to deal with the problem of bills and day-to-day living expenses. With money worries no longer an issue, the opposite parties don’t put pressure on them to force them to accept an unfair settlement.

There are numerous companies available that offer pre-settlement funding. One such company, Baker Street Funding, is a company that offers this funding solely on the strengths and merits of the case, without credit or employee background checks. In addition to supplying funding to plaintiffs and their attorneys, they also provide financing for law firms involved in class-action lawsuits. A class-action case involves many plaintiffs alleging that a defendant or group of defendants engaged in deceptive and wrongful practices against them. The advantage is that Baker Street Funding may offer significantly more capital under more amenable terms than a traditional bank loan.

Possible Disadvantages to be Considered When Applying for Pre-Settlement Funding

Remember that plaintiffs MUST have an attorney representing them, mainly because the attorney must sign a “lien acknowledgment” agreeing to pay the funding company when the case settles. In any event, plaintiffs should do research into several companies before signing anything because:

  • since lawsuit loans operate under different guidelines from other kinds of loans, a company is free to charge high-interest and compounded rates
  • lawsuit loans also come with fees such as service, archiving, and document fees that can add up significantly over time
  • while most pre-settlement funding companies stipulate that they expect repayment from future settlement proceeds, be sure to confirm the non-obligation to repay the company if the case is lost
  • since money is borrowed from expected lawsuit proceeds to pay the lender, this lessens the amount received by plaintiffs
  • some companies only fund certain states, so be sure to find out what these states are.

While pre-settlement funding can be the lifeline needed to avoid the desperation caused when facing a financial catastrophe, it’s best that all available options be considered (bank loans, insurance proceeds, disability, etc.) before making a final decision.



Please enter your comment!
Please enter your name here