If you have a pending personal injury lawsuit, you might be facing financial pressure, especially if the defendant’s insurer is offering you a settlement far below what your case is truly worth. Holding out for a fair settlement or taking your case to trial can be the right move, but it can also leave you struggling to cover everyday expenses like rent, mortgage, utilities, and groceries.
In situations like these, pre-settlement legal funding can provide the financial relief you need. However, you might be concerned about what this means for the confidentiality of your case. Will your attorney need to share confidential information with the lender? And if so, does this compromise your attorney-client privilege?
The short answer is yes, your attorney will need to share certain details about your case with the funding company. However, you can be confident that your private communications are not at risk. Legal funding companies are bound by strict confidentiality, and they have no incentive to compromise your case by revealing information with third parties.
Here, we’ll explore how attorney-client privilege interacts with pre-settlement funding, why your attorney’s involvement is required, and what safeguards are in place to protect your confidential information.
The Attorney-Client Privilege in a Nutshell
The attorney-client privilege exists to protect confidential communications between you and your attorney from disclosure to any third parties. This includes the opposing party and the court, with certain exceptions. This privilege lets you be completely open with your attorney, so he or she can offer you honest advice about the strengths, weaknesses, and overall value of your case. Without understanding all aspects—good, bad, and ugly—your attorney cannot effectively represent your interests.
For example, suppose you were involved in a car accident where the other driver was at fault, but you realized after the fact that your own last-minute lane change might have contributed to the accident. This is information your attorney needs to know to advise you properly. While this detail might eventually surface through independent evidence like surveillance footage, your discussions with your attorney about this issue are protected by privilege. The opposing party can’t force you or your attorney to reveal these conversations.
However, this privilege can be waived if you voluntarily share these privileged communications with others, such as friends or family. If the insurance learns that you disclosed your attorney’s assessment of your case’s weaknesses to a third party, they may be entitled to question that person about what you said.
Communicating with a pre-settlement legal funding company typically doesn’t waive attorney-client privilege, as confidentiality agreements or other legal doctrines often protect these communications, though this protection is not exactly the same as attorney-client privilege.
Why Would a Pre-Settlement Funding Company Need to Speak with My Attorney?
Pre-settlement legal funding companies are only repaid through the settlement or resolution of your lawsuit, making their advances non-recourse. This means that if you lose your case, the lender cannot pursue your personal assets, such as your home or car, nor will your credit be affected.
Because the lender’s repayment is contingent solely on the outcome of your case, legal funding companies conduct a thorough evaluation of what your case might settle for. They typically provide funding up to 10% of what your case is estimated to be worth.
To make an informed decision regarding your application, funding companies require your attorney to communicate with their underwriters and share the necessary details of your case file. Your attorney is the most knowledgeable in this regard, and providing relevant information helps the funding company assess the likelihood of repayment, thereby increasing your chances of approval.
Waiver Concerns if Your Attorney Shares Confidential Information with a Legal Funding Company
Before your attorney discusses the details of your case with a funding company, he or she must obtain your informed consent, as required by the rules of professional responsibility that govern attorneys. In this way, your attorney won’t disclose your personal case information without your permission.
Rest assured, communicating with a pre-settlement legal funding company doesn’t compromise your attorney-client privilege. The funding company is bound by confidentiality agreements to protect your case information.
What to Expect After Signing a Confidentiality Agreement
Once you and your attorney have signed a confidentiality or non-disclosure agreement with a legal funding company, the process of sharing information begins. Here’s what to expect:
- Careful Review: Your attorney will carefully select the case details that are relevant to the funding company’s assessment. This typically includes the nature of your case, the evidence supporting it, and the estimated timeline for resolution.
- Limited Disclosure: Only the information necessary to evaluate the funding request will be shared. The funding company does not have access to your entire case file, so your broader legal strategy remains confidential.
- Assessment and Decision: The lender’s underwriters will review the shared information, and based on this review, they’ll decide whether to approve your funding request and determine the amount you qualify for.
Common Misconceptions
Seeking Funding Weakens Your Case
Some believe that applying for legal funding signals to the opposing party that they are financially desperate, potentially leading to lower settlement offers. As mentioned above, funding companies work discreetly, and this process doesn’t affect the perceived strength of your case. Your attorney’s strategy and the merits of your case remain intact, with the funding process operating behind the scenes.
Legal Funding Increases Litigation Costs
Some clients fear that taking out a pre-settlement loan will ultimately cost them more in the long run, reducing their final settlement amount. While it’s true that funding comes with fees, it’s important to weigh this against the immediate financial relief it provides, which can help you avoid settling for less than your case is worth. Your attorney can help you understand the costs and benefits so you can make the best decision.
The Takeaway
If you have concerns about your attorney communicating with a pre-settlement legal funding company, it’s important to understand that the company’s only method of obtaining repayment is through the successful resolution of your lawsuit or claim.
Legal funding companies invest millions of dollars in legal claims, and they’re committed to maintaining confidentiality. Sharing information with the defendant or insurer would jeopardize your case and risk their investment, which is why they take privacy seriously.
Once you’ve decided to pursue funding for your pending settlement or jury verdict, consider starting your application with Baker Street Funding. We prioritize confidentiality and efficiency, with a legal funding process that takes just 24 hours. Upon approval, you’ll benefit from non-compounding rates, with a cap in place by the third year.
