Pre-Settlement lawsuit funding is also a non-recourse cash advance. The plaintiff takes the cash advance and in return they have to pay it when the lawsuit wins or settles.
But how does Pre-settlement lawsuit funding work?
The lawyer is contacted by the finance company and asks for all information regarding the case. They will then asses this information and speculate on what the likely outcome is or possible settlement. They give the advance to the plaintiff according to that assessment.
The injured plaintiff is not obligated to repay the advance if the lawsuit loses. At the same time, if the settlement or winnings are smaller than the advance, they do not have to pay higher than what the lawsuit gets. Legally, these advances are never called or characterized as loans.
When and why should an injured plaintiff use this option?
A sample case of when a pre-settlement lawsuit funding is a good option is if the litigation might possibly drag on for years. If the injured person is unable to work and produce income, they do not have a way of surviving or getting by. At the same time the lawyers are paying the cost. Also the state bar associations prohibit lawyers from loaning to plaintiffs because it is a possible conflict of interest. In most cases, taking the cash advance is the only option to keep paying the bills.