So, you have been in an accident, and the bills keep piling up. Hospital bills, mortgage, car repairs—the time you are missing from work is eating you alive. You may be wondering if you can get a pre-settlement loan, aka a cash advance on the money you expect to receive due to a personal injury lawsuit.
Why Pre-Settlement Funding?
Lawsuits can take months or even years to resolve. In many cases, insurance companies will use delay tactics to drag out the process, even if it is evident that they will eventually have to pay for your medical expenses. This means that while the case drags on, you are still on the hook for your monthly bills, which are growing by the day.
These delays are part of insurance companies’ strategy to finally make you give in and settle for less than you are due. By the time they are on their fifth stall tactic, most people will be willing to throw in the towel and accept any offer they can get.
The insurance company has a definite advantage over you. They have armies of well-fed attorneys, unlimited resources, and all the time in the world to make your life miserable.
Pre-settlement loans can give you the leverage you need so that you can wait for the money you deserve. They allow you to pay your bills to hold on for the duration of the case. You can use the pre-settlement funds for whatever you need. Groceries, car payments, kids’ tuition bills, attorney’s fees—it’s up to you.
You will either be paid in a lump sum or monthly disbursements. You decide on this when you take the loan. But when you win the case, you have to pay back the pre-settlement money along with additional fees and interest.
Can Your Lawyer Say No?
The pre-settlement funding company will need the cooperation of your attorney before it can lend you any money. The company is loaning you money based on the assumption that you will win the case and be able to repay the loan. This means that the lawsuit loan company will need to know all the facts of your case. They will discuss with your attorney the odds of your winning the case.
The drawback of this requirement is that your lawyer will have to breach attorney-client privilege. An attorney-client privilege is designed to protect an attorney’s clients from unauthorized sharing of confidential information that may ruin their case or their reputation. It is called a client’s privilege because only the client can waive the privilege and give the attorney the green light to share their secrets with non-members of the legal team.
Under the attorney-client privilege, an attorney is legally obliged to not share their client’s confidential info behind their backs even if those people are no longer their clients or have died in the meantime.
Imagine telling your lawyer that you had taken a sleeping pill before the accident. Your attorney will likely have to share that information with the lawsuit funding company. For this reason, your attorney might refuse to do business with a pre-settlement funding company.
Even if you agree for them to share your case details with a pre-settlement funding company, an attorney might refuse to legal funding contract agreement because it would land them in a conflict of interest with you. After all, they would become a trustee of the company, which means that they can no longer adequately protect your interests.
Also, there is little to no control over what will happen with the information your attorney decides to share with an outsider.
The Difference Between Pre-Settlement Legal Funding and Lawsuit Loans
There’s a big difference between legal funding and lawsuit loan. With a lawsuit loan, you will likely have to undergo a stringent process that includes a credit check and lengthy application. You may be asked to provide collateral to secure the loan. Also, you may have to start making payments immediately, even before your case concludes.
With legal funding like pre-settlement loans, there is no credit check or collateral necessary. You typically get the funds fairly quickly, in days instead of weeks. You pay nothing until you win your case, which frees you from the worry of trying to repay the money while still in litigation.
Can your lawyer deny your pre-settlement funding? Unfortunately, yes. The good news is that there are attorneys who will work with you to get the money you need while still protecting the confidential details of your case.