Understanding Lawsuit Funding: What You Need to Know-2023

Lawsuit funding is a type of financing option that provides financial assistance to plaintiffs who are awaiting the outcome of a legal case. This type of funding can help cover expenses such as medical bills, rent, or other costs of living while the lawsuit is pending. It is also known as pre-settlement funding, lawsuit loans, or legal funding.

What is Lawsuit Funding?

Lawsuit funding is a cash advance provided to plaintiffs who have a pending legal case. The funding is based on the potential future settlement or award of the case. This means that the plaintiff receives money before their case is resolved, allowing them to cover their expenses while they wait for the outcome of their case.

The funding is not considered a loan because it is not repaid unless the plaintiff wins their case. If the case is lost, the plaintiff is not required to repay the funding. If the case is won, the funding company is paid back from the settlement or award.

Why Choose Lawsuit Funding?

Many plaintiffs choose lawsuit funding because they need financial support while they wait for their case to be resolved. This type of funding can be especially helpful in cases where the plaintiff has suffered a severe injury, is unable to work, and has mounting medical bills and other expenses.

Lawsuit funding can also help plaintiffs who are struggling to make ends meet because their legal case is taking longer than expected. With the help of lawsuit funding, plaintiffs can pay for their living expenses and focus on their legal case, rather than worrying about how they will pay their bills.

How Does Lawsuit Funding Work?

The process of obtaining lawsuit funding is relatively simple. First, the plaintiff contacts a lawsuit funding company and provides information about their pending legal case. The funding company then reviews the case and determines the amount of funding that the plaintiff may receive.

Once the funding agreement is signed, the plaintiff will receive the cash advance. The amount of funding can vary based on several factors, including the type of case, the strength of the case, and the potential settlement or award amount.

It is important to note that lawsuit funding companies typically charge a higher rate of interest compared to traditional loans. This is because the funding is considered a high-risk investment, as the funding company is relying on the outcome of the legal case to be paid back.

Who Qualifies for Lawsuit Funding?

To be eligible for lawsuit funding, the plaintiff must have a pending legal case and have hired an attorney to represent them. The case must also have a strong likelihood of winning and a potential settlement or award amount that will allow the funding company to be paid back.

Lawsuit funding is available for a wide range of legal cases, including personal injury, medical malpractice, employment discrimination, and more.

Advantages of Lawsuit Funding

There are several advantages to choosing lawsuit funding over other financing options. For example, lawsuit funding does not require a credit check or proof of income. This means that plaintiffs who have a low credit score or are unable to work due to their injury can still receive funding.

Another advantage of lawsuit funding is that it allows plaintiffs to avoid settling their case for less than it is worth. In some cases, plaintiffs may be faced with the difficult decision to settle their case for less than they deserve because they need the money to pay their bills. With the help of lawsuit funding, plaintiffs can wait for their case to be resolved and receive a fair settlement or award.

Disadvantages of Lawsuit Funding

Some of the disadvantages of lawsuit funding include high interest rates, reduced settlement amount, no guarantee of funding, risk of losing the case, and potential ethical concerns.

Lawsuit funding companies often charge high interest rates compared to traditional loans, due to the high-risk nature of the investment. If the plaintiff wins their case, the funding company will be paid back from the settlement or award amount, which means that the plaintiff may receive a reduced settlement amount after the funding company is paid back. Additionally, there is no guarantee that a plaintiff will receive funding for their case, as the funding company will carefully review the case and the likelihood of a successful outcome before deciding to provide funding.

If the plaintiff loses their case, they will not have to repay the funding. However, this also means that the funding company will not receive payment for the funding provided. Some critics argue that lawsuit funding may encourage plaintiffs to pursue frivolous or weak cases, and it is important for plaintiffs to thoroughly research the funding company and their policies to ensure they align with their values.


Lawsuit funding can provide much-needed financial support to plaintiffs who are awaiting the outcome of a legal case. This type of funding allows plaintiffs to cover their expenses and focus on their legal case, rather than worrying about how they will pay their bills. While lawsuit funding is a high-risk investment for funding companies, it can be a lifesaver for plaintiffs who need financial assistance.