What pre-settlement funding is and how it differs from a loan
Pre-settlement funding is money a company advances to you while your lawsuit is still pending, based on the expectation that you will win or settle. Unlike a traditional loan, you do not repay it if you lose your case — the funder absorbs that loss. If you win or settle, the funder takes a percentage of your recovery, typically between 25 and 50 percent, depending on how long the case takes and the funder's assessment of risk.
Because the funder's profit depends entirely on your case outcome, they evaluate the strength of your claim before advancing money. A weak case or one likely to take years may be declined or offered at a much higher percentage. This is why pre-settlement funding is sometimes called non-recourse funding — the recourse (the way the funder gets paid) is your settlement or judgment, not your personal obligation to repay.
The key difference from a lawsuit loan is the structure: a lawsuit loan is technically a loan you must repay regardless of outcome, though in practice many funders will forgive the debt if you lose. Pre-settlement funding makes that forgiveness explicit and legal from the start. The trade-off is that the percentage taken from your settlement is usually higher than the interest on a traditional loan would be.
Key Takeaways
- Pre-settlement funding is an advance against your expected settlement or judgment, not a loan you must repay if you lose.
- The funder takes a percentage of your recovery — typically 25 to 50 percent — rather than charging interest.
- Funders assess your case strength before advancing money, so a strong case with clear liability gets better terms than a weak one.
- The money usually arrives within 24 to 48 hours of approval, and you can use it for any expense while your case is pending.
- Your attorney must agree to the funding arrangement, and the funder will contact them directly to verify the case details.
How the process and approval process works
You start by contacting a pre-settlement funding company and providing basic information about your case: the type of injury or claim, when it happened, who you are suing, and the approximate value you expect to recover. The funder will ask whether you have an attorney and will want their contact information.
The funder then contacts your attorney directly to verify the case details, assess liability, and estimate the likely settlement range. Your attorney does not have to approve the funding, but most will cooperate because it does not affect their fee — they still receive their percentage of the settlement separately. The funder is interested in whether the defendant is insured, whether liability is clear, and whether the case is likely to settle within a reasonable timeframe.
Once the funder has spoken to your attorney and assessed the risk, they will offer you a funding amount and a percentage fee. If you accept, you sign a contract that specifies the amount advanced, the percentage the funder will take from your settlement, and the conditions under which the funder gets paid. The money is usually deposited into your bank account within 24 to 48 hours.
What cases may have access to and what makes a case stronger or weaker
Pre-settlement funding is available for most civil lawsuits: personal injury claims, car accidents, medical malpractice, product liability, employment disputes, and property damage cases. It is not available for criminal cases or cases where you are the defendant. Some funders specialize in specific case types and may decline others.
A strong case — one that gets better terms and faster approval — typically has clear liability (the defendant's fault is obvious), documented damages (medical records, repair estimates, wage loss statements), and an insured defendant (meaning there is money to pay a settlement). A case where liability is disputed, damages are hard to quantify, or the defendant has no insurance is weaker and may be declined or offered at a higher percentage.
The timeline also matters. A case expected to settle in six months is lower risk than one likely to take three years, so the funder will charge less. Cases in early stages — where discovery has not finished and the value is still uncertain — are riskier than cases near settlement where both sides have exchanged evidence and have a clearer picture of what the case is worth.
How much the funder takes and what affects the percentage
The percentage a funder takes ranges from roughly 25 to 50 percent of your recovery, though some cases fall outside that range. The percentage depends on four main factors: how long you expect the case to take, how strong the funder believes your case is, how much money you are borrowing, and the funder's own cost of capital.
A case expected to settle quickly — within 6 to 12 months — might cost 25 to 30 percent. A case likely to take two to three years might cost 35 to 45 percent. A case with weak liability or uncertain damages might cost 40 to 50 percent or be declined entirely. Some funders charge a flat percentage regardless of timeline; others adjust it based on how long the case actually takes.
It is important to understand that this percentage comes out of your settlement before your attorney's fee is calculated. If you settle for $100,000, the funder takes their percentage first, and then your attorney takes their percentage from what remains. Ask your attorney to walk you through the math before you accept funding, so you understand how much you will actually receive.
When pre-settlement funding makes sense and when it does not
Pre-settlement funding is most useful when you have a strong case, clear liability, and an insured defendant, but you need money now to cover living expenses, medical bills, or lost wages while the case is pending. If you can afford to wait for your settlement without borrowing, you will keep more of your recovery by declining funding.
Funding also makes sense if you are being pressured to settle for less than your case is worth because you need money when ready. By advancing you funds, the funder removes that pressure and lets you hold out for a fair settlement. However, if you use the money to cover expenses you would have covered anyway, you are straightforward paying a percentage fee to access your own settlement early.
Pre-settlement funding does not make sense if your case is weak, liability is disputed, or the defendant is uninsured. In those situations, the funder will either decline you or charge such a high percentage that it eats most of your recovery. It also does not make sense if your case is likely to take many years — the percentage compounds over time, and you may be better off with a traditional personal loan at a fixed interest rate.
What happens to the funding if your case settles or goes to trial
When your case settles, your attorney notifies the funder of the settlement amount. The funder calculates their percentage, and that amount is deducted from your settlement check before you receive it. The funder and your attorney coordinate directly on this — you do not have to manage the payment yourself. Your attorney's fee is then deducted from what remains, and you receive the balance.
If your case goes to trial and you win, the same process applies: the funder takes their percentage from the judgment, your attorney takes their fee, and you receive what is left. If you lose at trial, you owe the funder nothing — they absorb the loss. This is the core protection of pre-settlement funding: you only repay if you recover.
If you settle or win but the recovery is less than the amount the funder advanced, the funder still takes their percentage of whatever you receive. For example, if the funder advanced $5,000 and you settle for $10,000, the funder takes 30 percent of $10,000 ($3,000), not 30 percent of the $5,000 they advanced. This is why it is critical to understand the contract before you sign.
Red flags and how to protect yourself
Be cautious of funders who may provide a specific settlement amount or promise that funding will speed up your case. No funder can control what a judge or jury awards, and funding does not affect how quickly a case moves through the court system. If a funder makes promises about the outcome, that is a sign to look elsewhere.
Read the contract carefully before signing, and have your attorney review it. The contract should clearly state the amount advanced, the percentage fee, how the percentage is calculated (flat or adjusted based on timeline), and what happens if the case is dismissed or you lose. Some contracts include hidden fees — charges for document review, case assessment, or payment processing — that are not obvious at first glance.
Ask the funder in writing how the percentage is calculated if your case takes longer than expected. Some funders charge a higher percentage for cases that extend beyond a certain timeline, and you want to know that upfront. Also ask whether the percentage applies to your entire recovery or only to the portion above the amount advanced. These details vary by contract and by funder.
Alternatives to pre-settlement funding
If you need money while your case is pending but pre-settlement funding is too expensive or you do not may have access to, consider a personal loan from a bank or credit union. A personal loan is a traditional loan you repay with interest regardless of your case outcome, but the interest rate is often lower than the percentage a funder would take, especially if your case is expected to take a long time.
Some attorneys offer case advances or loans to their own clients, either interest-free or at a low rate. Ask your attorney whether they have this option. You might also explore whether you may have access to for hardship programs from creditors, utility companies, or government agencies while your case is pending — these do not require you to borrow at all.
If your case is very strong and you expect to settle soon, you might also ask your attorney whether the defendant's insurance company will advance you money as part of settlement negotiations. Some insurers will do this to move a case toward resolution, though this is less common than pre-settlement funding.
Frequently Asked Questions
Can I get pre-settlement funding if I do not have an attorney yet?
Most funders require you to have an attorney before they will advance money, because they need to verify the case details and assess risk. If you do not have an attorney, you will need to hire one first. Some attorneys specialize in cases that attract pre-settlement funding, and they can help you understand whether funding makes sense for your situation.
What if my case is dismissed or I lose at trial?
You owe the funder nothing if you lose. That is the core protection of pre-settlement funding — it is non-recourse, meaning the funder's only recourse is your recovery. If your case is dismissed or you lose at trial, the funder absorbs the loss and you keep any money they advanced.
Does pre-settlement funding affect my attorney's fee?
No. Your attorney's fee is separate from the funder's percentage. If your attorney works on contingency (taking a percentage of your settlement), they calculate their fee from what remains after the funder takes their cut. The funder and your attorney coordinate on payment, but the funding does not change what your attorney charges.
How long does it take to get the money after I explore?
Most funders can approve and deposit money within 24 to 48 hours of receiving your attorney's verification of the case. Some can move faster if the case is straightforward and your attorney responds quickly. The slowest part is usually waiting for your attorney to return the funder's call or email.
Can I get funding from multiple companies for the same case?
Yes, though most funders will ask whether you have other funding on the case. Some will decline if you do; others will work with you as long as the total amount advanced does not exceed what they believe the case is worth. Your attorney should know about all funding on your case, because they need to coordinate payments when the case settles.