Pros and Cons of Lawsuit Funding


Your chances of being involved in a lawsuit at some point in your life are higher than you might think. In fact, 79% believe that advertising of personal injury lawyers encourages people to sue, even if they haven’t been injured.

If you do become involved in a lawsuit at some point, it might surprise you to know how long some lawsuits take to get through the entire legal process of litigation. Plus, if you are unlucky enough to be involved in a situation where you are unable to earn a living due to an injury and you are suing for that reason, your funds to pursue a lawsuit might be limited.

Luckily, there are several forms of legal funding, including pre-settlement funds and pre-settlement loans, to assist you in paying for legal counsel and other necessary fees and expenses while you pursue your legal case. In fact, sometimes these funding sources will even cover your living expenses until the end of your civil case.

But before you take on one of these forms of legal funding, you should be aware of their pros and cons.

Lawsuit Loans/Advances

One of the types of legal funding that may be available to you as you pursue your legal case is a lawsuit loan or advance. A lawsuit loan is a loan that you may take on to pay for your legal and living expenses as your pursue your lawsuit. The pros of a lawsuit loan is that funds are generally available quickly so your cash-flow is not negatively impacted. It can also give you additional time to work out a favorable lawsuit settlement, as often times settlements are rushed due to the immediate need for funds. When settlements are rushed, you may not always get the best outcome possible.

Lawsuit loans do have cons too. As the name implies, a lawsuit loan must be paid back at the end of your lawsuit, regardless of the outcome. Typically lawsuit loans also have very expensive, with interest rates between 27% and 60%! Lawsuit lenders are not regulated under the same standards as other loans which is why they are able to high such high interest rates and qualifications that are difficult for some cases to meet.

Lawsuit Funding

Pre-settlement funding is another sources of legal funding that may be available to your as your pursue your lawsuit. Unlike a lawsuit loan, pre-settlement funding doesn’t have to be paid back at the end of the suit, which is a huge pro to seeking out this type of funding. Like a lawsuit loan, pre-settlement funding can be used for day-to-day living expenses and legal fees alike.

But since the funding company is taking on the risk of your case by giving your funding no matter the outcome, it is even more difficult to qualify for than a lawsuit loan. Pre-settlement funding companies do extensive research on your case and the weight the outcome before deciding if your case qualifies and how much funding it may qualify for.

Before you take on legal funding of any kind while you pursue a lawsuit, be sure you understand the differences between lawsuit loans and pre-settlement funding.


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