Pre-Settlement Funding Complete Guide & Checklist

• Credit Checks
  Lenders, like banks, do credit checks. A reputable legal funding company doesn't do credit checks. Rather, they concentrate on the strength and value of your legal claim. Bad credit shouldn't prevent you from getting the money you need if your case is strong.
• Collateral
  Conventional loans often require some form of collateral. This can be your house, your car, or anything of acceptable value. However, pre-settlement funding is backed by the successful settlement of your lawsuit.
• Liability
  On a standard loan or credit cards, you're liable for the debt no matter the outcome of your case. If you can't repay it then it impacts your credit score and you may have legal action taken against you. With pre-settlement funding you're not at risk. If you don't get a settlement you usually don't have to pay the funds back.

• Substantial Injury
  You must have a serious injury relating to the incident. Also, you have to be able to show financial loss. These would be things like medical bills, prescriptions, and you not able to work.
• Acceptable Type of Case
  Certain types of personal injury cases have more probability of winning a settlement. This puts less risk on the legal funding company since they're the ones taking all the risk. So, funding is more available for these types pf cases. Examples of lawsuits with a high chance of success are:
  • Car accidents
  • Slip and fall accidents
  • Dog bites
  • Construction accidents
  • Workplace accidents
  • Product liability
  • Medical malpractice
  • Nursing home negligence
  • Wrongful death
• Current Pending Lawsuit
  You must be in a personal injury lawsuit right now. This means that your case was filed in a court of law and that you're seeking payment for your injuries.
• Legal Representation
  You must have a qualified attorney representing you who only gets paid if you win your lawsuit.
• Strength of Case
  You must have a case with merit and the possibility of settlement. A funding company will review your case, its potential for success, and value of settlement. They'll look at the evidence of your claim and also consult with your attorney.
• Defendant Has the Ability to Pay
  The apposing party or their insurance company must have the means to pay the anticipated settlement amount.
• State Allows Funding
  You must live in a state that allows pre-settlement funding. For example, the state of Florida allows this type of funding. There are some states the have regulations or rules on certain types of funding.

Applying for Pre-Settlement Funding

1. Gathering of Information
   • The injured person or their attorney contacts a reputable legal funding company.
   • An application form is submitted to get details and the amount of money requested.
   • The legal funding company gets the information they need about the lawsuit.
2. Case Review by the Funding Company
   • The legal funding company reviews the case, its merits, and likelihood of success.
   • Their review includes evaluating the application and speaking with the attorney.
3. Attorney Communication
   • The legal funding company needs the attorney to give specifics about the case including:
     • Police report if applicable
     • Medical and doctor records and bills
     • Proof of lost wages and inability to work
     • Any communications with party at fault and their insurance company
     • Professional opinion on the strength of the case and settlement amount
   • Also, the attorney must agree to repayment of funding from the awarded settlement.
4. Risk Analysis
   The legal funding company will evaluate the following risks before giving funds:
   • Potential of winning the case or successful settlement
   • Possible settlement amount or judgement
   • At what stage the lawsuit is currently in
   • Applicable state laws and jurisdiction

Approval and Funding Agreement

1. Reason for Amount of Funding
   • Once the legal funding company approves your application, they'll set how much money they can offer you. This is not the full predicted settlement but rather a part of it.
   • The amount of funding is based on the possible value of settlement and expected timeline of your lawsuit. Also, interest rate and fees are added to the repayment amount.
2. Interest Rate and Fees
   • You and your attorney need to review the terms of your funding agreement completely. This is an important step and includes:
     • Interest Rate: Although pre-settlement funding is not a typical loan it does include interest. The rate may be higher due to the risk the funding company is taking in providing money with no collateral.
     • Compound Interest: Look to see if compounding interest applies over time and how it compounds.
     • Fees: Legal funding companies charge different fees for their services. Identify any undisclosed fees.
     • Structure of Payment: How the amount of repayment is determined from the settlement.
   • Make sure you choose a funding company that is totally transparent about their interest rates and fees. Ask about any potential hidden fees before signing your agreement.
3. Signing Your Funding Agreement
   This makes the funding agreement legally binding. You sign the agreement only after you and your attorney are fine with the terms of funding.

Funds Disbursement

Funds are given to you by check or direct deposit once the signed agreement is in place. How fast you get your money depends on the legal funding company. Be aware that holidays and weekends do add extra wait time.

Process of Repayment

1. Repayment of funds usually comes from your settlement:
   • Once your lawsuit settles or a judgement is reached, funds from the settlement are normally paid to your attorney.
   • More often than not, your attorney is the one that pays back the legal funding company as part of the signed agreement. The agreed amount is the provided funding along with interest and fees. After which the remaining amount is sent to you.
2. What if you lose your case:
   Due to pre-settlement funding being non-recourse, you're usually free from having to pay back your funding if you don't win your lawsuit. This is the risk the legal funding company takes and is the reason they scrutinize your case and may charge higher interest rates than a standard loan.

• Access to Fast Money for Your Living Expenses
  One of the biggest benefits is covering living expenses like mortgage or rent payments, electric bill, water, and groceries. If you're injured and not able to go to work, your amount of income is effected. Pre-settlement funding provides the money you need to pay the bills until you lawsuit settles.
• Can Help You Pay to Get Your Car or Truck Fixed
  If an auto accident was the cause of your injury then pre-settlement funding can help you fix your vehicle. This way you can get back on the road. So you can get where you need to be without relying on others or spending money on transportation.
• Helps You Hold Out Against Low Settlement Offers
  The party at fault or their insurance company will often offer a low settlement amount knowing you need money now. This quick offer may seem like the only way you can pay the bills that are piling up. However, with funding you can resist the low-ball offers. This allows you time to fully treat your injuries to determine the extent of it and if it's permanent. Your whole person impairment can lead to more money awarded in settlement. It also provides more time for your attorney to fight for the settlement you deserve.
• Provides Equal Footing With the Insurance Company
  Insurance companies and large corporation have more money than you do. So they tend to drag out the legal battle in hopes you'll settle early due to the strain of finances. Pre-settlement funding helps even the playing field by allowing you to wait out the legal process so you can get a fair settlement amount.
• Lessens Pressure and Worry During Difficult Times
  A lawsuit is stressful enough but being injured on top of that can be unbearable. Especially if worrying about your finances. Funding can help to reduce your stress allowing you to zero in on winning your case.
• Allows You to Prioritize Your Recovery From Injuries
  Most importantly, less worry can effect your emotional health which can directly impact how well you recover from your injuries. Also, doctor visits, medical treatments, and rehab play a crucial role in strengthening your case. See how pre-settlement lawsuit funding helps you now and later.

• Funding Cost
  The top drawback is that the interest and fee may be higher than a standard loan. Remember, the funding company is the one who takes on the risk. They only get their money back if you win your case or get a settlement. To offset this, their interest rates and fees may be more than that of a loan from a bank or a lender.
• Final Settlement Amount
  A part of your settlement or judgement will pay back the funding company. Due to this, you will get a lesser amount of the total awarded when your case settles.
• May Not Be a Good Fit
  Since every case is unique, pre-settlement funding may not be good for all lawsuits or for everyone. Be sure to discuss this option with your attorney for insight into your specific situation.

• It is a normal loan
  Truth: Although sometimes called a lawsuit loan, it is not a conventional loan. Pre-settlement funding is a cash advance that is non-recourse by nature.
• It is only for frivolous lawsuits
  Truth: A funding company that is reputable will depend on the merit of a lawsuit. Since they only get their money back if a case wins a settlement the cases they fund must be legit.
• It harms the case
  Truth: Pre-settlement funding should not cause a negative effect on a case. Unless, of course, the case is shallow, senseless, or valueless. In fact, it can strengthen it by relieving pressure to settle quickly for less money.
• It is only a last hope resource
  Truth: Although this type of funding can help in last resort circumstances, it is more often seen as a smart solution in getting the settlement an injured person actually deserves. Many times, an injured person does not fully treat their injuries by settling too early. They lose quality of life due to a whole person impairment which usually results in a larger settlement.

Track Record & Reputation

• Look into the company's history and read online reviews. Google Reviews are a great source and are listed in the company's business profile. See what is written about customer service, ethical practices, and transparency.
• See how long they have been in business in your state of residence.
• The company being accredited with relevant organizations in their industry doesn't hurt either.

Quickness & Proficiency

• Look at how fast they can provide funding once the application is approved.
• Note: Speed alone can be misleading, don't rank it above their transparency, customer service, or fair practices.

Transparent Interest Rate & Fees

• Only choose a legal funding company who states their interest rate and fee. This includes any application, processing, or other fees they may charge. Also, how they calculate interest whether periodic, compound, or simple.
• Be sure to steer clear of companies who charge hidden fees. A good way to tell is if they don't explain the final cost.
• Research a few reputable funding companies and compare their fees and interest rates.

Customer Communication & Service

• When reading customer reviews, be sure the funding company answers questions and are responsive.
• Keep in mind, during the process, a reputable funding company will be open to communication.

Fair Practices

• Caution against companies who pressure people into choosing their funding or make promises that are unrealistic.
• The company you choose should be upfront and straight forward in their business relationship.
• Be sure the funding company works with your attorney and honors the client-attorney relationship.

• Personal Savings
  A practical and efficient alternative is your personal savings. If you have enough, you can tap into these fund the fastest as it's readily available to you. There's no interest or fees with using your savings account. But, be mindful as you may be reserving this for other things like loss of job, home or auto repairs, vacations, wedding, and retirement.
• Loans from Friends or Family
  If you have friends or family that can afford it, borrowing from them is another option. It may cost you less if they're willing to do lower to no interest and/or fees. They may even be more flexible with your repayment timeline. But, keep in mind, this could strain your relationship especially if it becomes hard to repay as agreed.
• Loans from Creditors
  You may be able to have your creditors defer or reduce payments for some time. This depends a lot on your individual circumstances. It can include mortgage, credit cards, and some utilities for a set timeframe. However, interest rates will most likely still accrue as usual. You can try explaining your situation and that you have an active lawsuit but they are not required to assist you.
• Disability Benefits
  If they apply to your situation and your injuries are serious and lasting, you may qualify for short or long term disability. This comes from your employer, your insurance, or some government programs like SSDI. This stands for Social Security Disability Insurance. The application process can be long and there's no guarantee of approval.
• Public Assistance Programs
  If you lose your job due to your injury you might be eligible for unemployment benefits. Public assistance programs may be available in your area or state. However, it depends on if your circumstances and income qualifies you.
• Letters of Protection or Medical Liens
  A doctor or hospital may offer continued service for a lien on your settlement in some cases. Just like with a legal funding company they get payment from your case once it settles. In a similar way, your attorney may be able to use a letter of protection in place of a lien. Both can postpone medical care costs until your case ends.
• Home Equity Line of Credit
  Also known as HELOC, you can possibly get a home equity loan to help with expenses. It requires that you own your house outright or there's enough equity in it. These usually have a lower interest rate because your house is the collateral. Approval can also depend on your credit record. Bear in mind, this loan does put your house at risk if you're unable to repay.