1. Home
  2. /
  3. education
  4. /
  5. What Is Pre Settlement...

What Is Pre Settlement Funding and How Does It Work?

In the uncertain times that often follow a serious legal dispute, financial stability can seem like a distant dream. For those awaiting the resolution of a lawsuit, the structural and financial delays can be overwhelming. 

This is where pre-settlement funding comes into play—a financial option that provides relief when it is most needed. 

Let’s delve into what pre-settlement funding is, how it operates, and the critical elements one should consider before applying.

What is Pre Settlement Funding and How Does It Work?

Pre-settlement funding serves as a financial bridge for plaintiffs who are in the midst of a lawsuit and in need of money. Unlike traditional loans, this funding is a cash advance against the expected lawsuit settlement. 

It is specifically designed for individuals who are involved in ongoing legal cases such as personal injury, wrongful death, or workers’ compensation claims.

What Is Pre Settlement Funding? Detailed Guide

How Does Pre-Settlement Funding Work?

Application Process

The first step towards obtaining pre-settlement funding is the application process. Potential recipients must provide details about their legal case and the contact information for their attorney. 

This information allows funding companies to start the evaluation process.

Evaluation and Approval

Once the application is submitted, the funding company reviews the case’s merits based on documentation and discussions with the applicant’s lawyer. 

The amount of money offered generally depends on the potential settlement size, the strength of the case, and the estimated date of resolution. If the company deems the case strong enough, they will extend a funding offer. 

This process, from application to receiving funds, can typically take anywhere from a few days to a couple of weeks.

Agreement Terms

In the funding agreement, the terms including the cash advance amount and the fee structure are clearly laid out. 

The interest rates on pre-settlement funding can vary, but due to the non-recourse nature of the funding—where funding companies only get repaid if the plaintiff wins or settles the case—rates can be higher than standard loans.

Benefits of Pre-Settlement Funding

The primary benefit of pre-settlement funding is that it provides financial relief during a period when plaintiffs might struggle to meet their monetary needs. 

Since legal battles can be prolonged, access to such resources allows individuals to manage living expenses and medical bills without the pressure to settle quickly for a lower amount than what might be rightfully theirs.

Risks and Considerations

While pre-settlement funding offers notable advantages, it also comes with certain risks. The fees and interest rates can accumulate, potentially consuming a significant portion of the settlement amount. 

Therefore, it is vital for applicants to review their financial options carefully and understand every aspect of the agreement before proceeding.

Choosing a Pre-Settlement Funding Company

Selecting the right funding company is crucial. Look for companies that are transparent about their terms and conditions and have a reputable track record. 

Avoid those that offer unclear fee structures or pressure you into making quick decisions. It is often beneficial to compare different offers to find the one that best suits your needs.

Pre-Settlement Funding

Legal and Ethical Considerations

The legality of pre-settlement funding varies, with some jurisdictions having specific regulations in place. It is important to have a comprehensive discussion with your attorney about the implications of accepting such funding. 

Ethically, attorneys must guide their clients towards decisions that best preserve their interests without being influenced by the prospects of pre-settlement funding.

Frequently Asked Questions

What happens to the pre-settlement funding if I lose my case?

The funding is non-recourse, which means if you lose the case, you owe nothing back to the funding company.

How soon can I receive funds after approval?

The time frame can vary but typically, funds are disbursed within a few days to a week after approval.

Are there any upfront fees involved in applying for pre-settlement funding?

Reputable companies usually do not charge application fees, but it’s always good to confirm this directly.

Can pre-settlement funding affect the outcome of my lawsuit?

The funding itself does not affect the lawsuit’s outcome. However, it can relieve financial stress, allowing you to continue pursuing your case aggressively.

Is there a limit to how much I can get from pre-settlement funding?

The amount depends largely on the estimated value of your case and how much the funding company believes you will be awarded.

Navigating through a lawsuit can be taxing. With the help of pre-settlement funding, plaintiffs can ease their burdens and focus on what truly matters—achieving a fair resolution to their legal battles.


Pre-settlement funding is a valuable resource for those caught in lengthy legal proceedings. 

By providing financial support when it’s most needed, it allows plaintiffs to maintain their lives without compromise and fight for the justice they deserve. 

However, it’s crucial to approach this option with a thorough understanding of its mechanics and implications.