Quick answer: This is one of the most common misunderstandings plaintiffs have when they first ask about pre-settlement funding. Pre-settlement funding is not meant to pay attorney fees. In personal injury cases, attorneys are usually paid through a contingency fee, which means their fee comes from the settlement if the case is successful. So when someone is looking for funding to pay legal fees, that usually signals a situation most pre-settlement funding companies will not approve.
Pre-settlement funding is an option many plaintiffs consider when they’re waiting for a personal injury case to settle. This type of funding, sometimes called a “lawsuit cash advance,” helps cover your living expenses and other pressing bills. It’s a practical way to access part of your potential settlement early, without having to worry about monthly repayments. However, one common question people often ask is whether pre-settlement funding can pay for legal fees.
Below, we’ll explore why pre-settlement funding isn’t typically used for attorneys’ fees and break down the reasons why.
Understanding Legal Fees in Personal Injury Cases
Most personal injury attorneys work on a contingency fee basis. This means they only get paid if you receive a settlement or win a judgment. That arrangement makes it easier for injured plaintiffs to hire quality legal help without paying large fees upfront. Attorneys and lawsuit funding companies usually structure their contracts so payment is only owed if you win.
Because of these contingency fee arrangements, there’s no requirement for you to pay your attorney during your case. This is why you generally don’t need a separate source of financing to cover legal costs. If your attorney doesn’t secure a favorable outcome, then you typically don’t pay anything for any legal work.
Why Pre-Settlement Funding Isn’t Used for Legal Fees
Pre-settlement funding companies take on significant risk by providing non-recourse legal funding. “Non-recourse” means you only pay back the advance if you win your case. Because of this risk, the funds are specifically directed to help you stay afloat financially while you wait. Funders typically only approve applications for daily needs and emergency costs—like medical bills, rent, or car payments. These are expenses that can’t just wait until the case settles. If you need more time for negotiations or need medical treatment, this advance buys you room to breathe.
However, pre-settlement funding is not designed for legal fees. This is because using the funds for attorney fees increases risks for both the legal funding company and the case itself. If you were to use the advance to pay your attorney, funding providers will conclude that your attorney isn’t confident enough in the case to work on a contingency basis. This could raise concerns for the funding company about the strength of the case. It can also create extra concerns about how the case is being funded and whether outside money is affecting litigation decisions.
Legal funding companies evaluate cases based on their chances of success, and funding is meant to ease financial burdens during the legal process—not to pay for litigation.
Most pre-settlement funding companies view a request to pay attorney fees in a personal injury case as a major underwriting red flag.
The Rare Exceptions
In some lawsuits, there may be unique costs tied to investigating a case or hiring experts, such as a medical malpractice or wrongful death. Sometimes, attorneys will bill certain out-of-pocket expenses separately. Even then, your attorney and the funding company will typically evaluate if those costs—which specifically go to your attorney for case expenses, not directly to you—are eligible for funding.
If you need crucial medical treatment or specialized testing, pre-settlement funding can also cover those costs through a form of financing called medical lien funding. This keeps the purpose of pre-settlement funding clear: to ease your personal financial strain until the settlement arrives.
Additionally, plaintiffs in complex commercial or business litigation sometimes seek financing for attorney fees. Unlike personal injury or civil rights cases, these matters usually aren’t handled on a contingency basis; attorneys may charge hourly or require a retainer. Because there’s no guaranteed settlement to cover those costs, plaintiffs may turn to third-party financing. This practice is more like “legal funding” or “litigation financing,” rather than standard pre-settlement funding for personal injury claims.
What You Can Use Pre-Settlement Funding For
Many plaintiffs use pre-settlement funding for urgent or recurring living costs. Common examples include covering lost wages, keeping up with mortgage or rent, paying utility bills, or handling medical expenses. You can also use it for essentials like groceries or car repair.
The flexibility of pre-settlement funding can be a huge relief, especially when you’re dealing with the stress of an injury. It’s intended to help you avoid low-ball settlement offers made by insurance companies who know you might need the money quickly.
How to Decide If Pre-Settlement Funding Is Right for You
Before seeking a lawsuit cash advance, talk to your attorney about your case’s timeline and possible settlement amount. See if the funding fits with your overall legal game plan. Consider whether you truly need immediate financial support to hold out for a fair settlement or if you have other resources available.
Because interest rates and fees can add up, you should apply for only the amount you really need. Stay mindful that this money isn’t free—it’s an investment from the funding company that will come out of your future settlement.
The Takeaway
According to the American Bar Association, contingency fee arrangements are most often used in cases involving personal injury or workers’ compensation, where the lawyer is paid only if the case is handled successfully. That is one reason pre-settlement funding is generally used for the plaintiff’s living expenses, not to pay the attorney’s legal fees.
This type of funding is specifically meant to relieve your personal financial burdens, not to pay your lawyer. By covering your everyday costs, it lets your attorney take the time necessary to fight for a reasonable settlement. The non-recourse structure ensures that if you don’t win, you don’t repay.
If you’re considering pre-settlement funding, have an honest talk with your attorney about your case and your personal finances. Together, you can decide if a lawsuit cash advance is the right move. Ultimately, the goal is to help you stay financially stable, so you can focus on recovering from your injury and letting your attorney handle the legal battle.
Apply for Non-Recourse Funding and Avoid Unnecessary Financial Stress
At Baker Street Funding, we get it—the lawsuit process is tough. That’s why we offer fast, no-risk pre-settlement loans for personal injury cases. We’re here to help you stay financially stable while your attorney works to get you the best outcome possible.
Apply for lawsuit cash today or contact us at (888) 711-3599 to learn how our transparent terms, competitive rates, and personal service can help you bridge the gap until your case resolves.
FAQs
Can Pre-Settlement Funding Pay for My Attorney’s Fees?
No. Attorneys in personal injury cases usually work on a contingency fee basis, which means they only get paid if you win or settle. Their fee is a fixed percentage of your total settlement, calculated before any other costs. Since their payment comes directly from your final settlement, pre-settlement funding isn’t needed to cover legal fees.
What Can I Use Pre-Settlement Funding For?
You can use lawsuit funding for urgent expenses like rent, mortgage payments, medical bills, or general living costs. It’s designed to support your daily needs while you wait for the settlement you deserve, not to pay for attorney’s legal fees.
How Do I Know If Pre-Settlement Funding Is Right for My Case?
Consider your current financial needs, the timeline of your case, and whether you have other sources of financial support. If awaiting the resolution of your case is causing a financial strain that might force you to accept a lower offer, pre-settlement funding can help you hold out for fair compensation. Be sure to discuss this with your attorney.
Are There Alternatives to Pre-Settlement Funding for Managing Legal Costs?
Yes, there are several alternatives. These include attorney payment plans, contingency fee arrangements, traditional bank loans, legal fee financing, and pro bono legal services. Some attorneys also accept credit cards, and crowdfunding platforms can be another option for gathering funds.
How is My Settlement Money Distributed?
When your case settles, the money is distributed in a specific order: first, your attorney receives their agreed-upon percentage, then priority and medical liens are paid, followed by repayment to the lawsuit funding company. You receive the remaining balance after all these payments are made.
