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Should You Consider Legal Funding for Your Injury Claim?

Legal funding is a relatively new industry whereby companies purchase an injured plaintiff's lawsuit, or at least a portion of it, by giving the person a cash advance in exchange for recouping the amount advanced with interest when the lawsuit settles or is resolved at trial.

The concept is to give plaintiffs with pending lawsuits a portion of their expected settlement proceeds sooner since lawsuits typically take many months or years to resolve. Injured victims of auto accidents or other personal injury cases often have trouble paying for medical treatment not covered by insurance, if available. Should they be unable to work, just meeting daily living obligations can become burdensome.

In lieu of facing extreme financial hardship or filing for bankruptcy, legal funding offers an option to injured plaintiffs to receive a cash advance leveraged against the future resolution of their case. For plaintiffs who face financial difficulties, legal funding is an excellent option.

Cases Amenable to Legal Funding

The types of cases that legal funding companies offer cash advances for include:

Benefits of Legal Funding

The main benefit of legal funding to plaintiffs is that they assume no risk if they should lose their case or the money judgment is less than what was advanced. The cash advances are non-recourse funds, meaning that the plaintiff has no obligation to pay back the legal funding company if they do lose the case.

Other benefits include:

  • No collateral required
  • No cosigners needed
  • No requirement the plaintiff be employed
  • No credit check
  • No payments until case is resolved
  • Fees charged are capped after a specified time


Legal funding companies will generally not fund minor injury cases, cases in which insurance coverage is an issue, or when there is no reliable funding source. Also, the injured party must be represented by an attorney.

The process is initiated with the plaintiff or personal injury attorney submitting an application for the cash advance. The legal funding company will discuss the case with the plaintiff's attorney and determine the likelihood of a favorable resolution, the case's range in value, and source of funds when the case is resolved. If approved, the company sends an agreement to the plaintiff and attorney with its terms, rates, and offer.

There are no restrictions or requirements on how the plaintiff must spend the funds. Also, most companies will offer post-settlement funds if the case is on appeal subject to the same above considerations.

To Fund or Not to Fund

The legal industry is regulated by the states. Further, its trade association, the American Legal Finance Association, has ensured that its members strictly comply with prescribed ethical standards. Plaintiffs have little risk and much to gain by taking advantage of legal funding if waiting for their case to resolve is causing financial hardship.