Pre-Settlement Funding: Frequently Asked Questions
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General Questions: Pre-Settlement Funding
Pre-settlement funding and post-settlement funding provides financial security to plaintiffs involved in personal injury, whistleblower, medical malpractice or railroad employee lawsuits. Often, plaintiffs in these matters will be unable to work and eager to settle, as they worry about losing their homes, paying their bills and managing day to day expenses.
The settlement advance provided by pre-settlement funding and post-settlement funding removes the financial burden from plaintiffs, allowing their attorneys to fight for a fair settlement for them. The plaintiffs are better able to withstand what is sure to be a long litigation process, and plaintiffs’ lawyers working on a contingency fee basis are able to benefit by negotiating a larger settlement. The larger settlements not only benefit attorneys financially but also by reputation, as attorneys who successfully negotiate large settlements for their clients receive future business from the client as well as referrals.
Litigation financing, litigation funding or legal funding – pick your preferred term – works like this: a plaintiff with a personal injury, workers compensation, qui tam, medical malpractice, or FELA lawsuit pending applies for a settlement advance. One of our representatives at USClaims will review the application, and once we approve it, we’ll send a purchase agreement and forward the funds to the plaintiff within 24 hours.
Litigation funding can be used by the plaintiff to pay day-to-day expenses, like rent, utilities, groceries and other living expenses. Industry statistics show that 62 percent of settlement advances are used to stop foreclosure or eviction actions. Without litigation funding, many plaintiffs would find themselves homeless, have to pull their children out of college, or have their vehicles repossessed.
Anyone who is involved in a personal injury lawsuit with a mature claim is eligible for litigation financing. This means that the plaintiff is seriously injured, has a lawsuit with strong merits against the defendant, and is represented by an attorney on a contingency basis.
Cases that are eligible for the litigation funding include medical malpractice claims, premises and slip and fall claims, workers related matters, qui tam or whistleblower lawsuits, railroad employees and FELA claims, auto accidents and medical malpractice lawsuits.
In order to be considered for litigation funding, the plaintiff needs to have retained an attorney, and to have filed a lawsuit or (will soon be filing a lawsuit) in the applicable court of law.
Pre-settlement funding and post-settlement funding carries no restrictions on its use and can be used for personal expenses like housing, food, medical bills, tuition, business costs, and utilities.
When the plaintiff receives a settlement or a favorable judgment in the lawsuit. USClaims collects directly from the proceeds of the settlement. Litigation funding does not need to be repaid if the plaintiff loses the case.
ALFA stands for the American Legal Finance Association, which sets the standard for litigation funding, pre-settlement funding and post-settlement funding companies. With 31 members, it establishes the highest ethical standards and fair business practices for the industry, and its members provide non-recourse legal funding throughout North America.
Once your application is approved and the purchase agreement accepted, you’ll receive your settlement advance in less than 24 hours.
The typical plaintiff applying for and receiving a settlement advance are eligible for approximately 10 percent of the value of the case, which can vary depending on the injury sustained. We work with your attorney to determine the best plan for you.
Submitting a request for litigation funding is simple. Fill out the form on our website to get started. We’ll ask you a few questions about your case and your attorney to get the ball rolling.
A settlement advance is different from a bank loan. The biggest difference is that you don’t have to pay back a settlement advance if you lose your case, whereas with a bank loan, you must pay back the loan amount.
Additionally, bank loans typically require monthly payments. A settlement advance does not; it is repaid directly from your settlement.
Finally, a settlement advance differs from a bank loan in that bank loans are typically granted based on employment status, credit history, or assets. Litigation funding companies do not look at these factors when considering an application for a settlement advance; rather, litigation funding companies look at the merits of the case, the likelihood of success, and the amount of the potential settlement.
Depending on the amount of the settlement, litigation funding requires a fee to be paid out of the settlement. This is calculated on a case-by-case basis. We have some of the lowest rates in the industry. Other companies may offer services that resemble our pre-settlement funding options, but USClaims prides itself on offering low rates and fees with no hidden surprises.
Because litigation funding is a non-recourse method of financing, if you lose your case, you do not have to pay back the advance. The only reason why you would be required to pay back an advance is if you provided false information, committed fraud or breached the purchase agreement.
Once you receive a settlement, in our purchase agreement you will instruct your attorney to pay USClaims it’s purchased amount so you don’t have to worry about writing a check to USClaims.
Because of the nature of litigation funding, you do need to have an attorney to be eligible for a pre-settlement advance. We work closely with your attorney to find the best plan for you, and your attorney will provide a guideline regarding the amount of your expected settlement and the value of your case, which we base our settlement advance amounts upon.
