If you have a pending personal injury lawsuit, but the defendant’s insurer is squeezing you and offering you pennies on the dollar for a case worth six or even seven figures, holding out for a real settlement offer or until your case goes to trial is a wise move.
However, this can have real consequences for you and your family if you cannot work and you need to continue to pay the bills associated with your everyday life, whether it is the rent, mortgage, utility bills, or groceries. Under these circumstances, you may be thinking of seeking pre-settlement legal funding.
At some point during your search, there may come a time when you need to ask the question: if I want to get pre-settlement funding, is my attorney required to share confidential information regarding my case with the lender? The answer is yes. If you want to get considered for a “loan on your case,” your attorney must first share your “case information” with the lender because your loan will be based on the potential value of that case.
A pre-settlement legal funding company is also required to keep the information of your case confidential. In many cases, if a claim is worth over $2 million, a lender will require the plaintiff and attorney to sign a confidentiality and non-disclosure agreement.
When boiled down to the most basic concept, legal funding companies are not incentivized to share confidential information with anyone else. In doing so, they would jeopardize their chances of being repaid.
We’ll do a deep dive into attorney-client privilege, why third-party litigation funding companies require important case information to make a funding decision, and why your permission is necessary.
The Attorney-Client Privilege in a Nutshell
The attorney-client privilege exists to ensure that anything you share with your attorney or vice versa is protected from disclosure to the defendant, even the court, or any other third party besides you and your attorney. The purpose of this privilege is to encourage you to be completely honest with your attorney about the details of your case. This helps your attorney be as frank with you as possible regarding the value of your case, whether you should accept a particular settlement offer, or whether it makes sense to take your case to trial instead. Without knowing the good, the bad, and the ugly, your attorney cannot properly advise you what your case’s value is.
For example, if you were involved in an accident in which the other driver hit you and was deemed to be at fault, but what happened is that you realized you were about to miss your turn, switched lanes abruptly, and turned on your turn signal at the last minute after the accident already happened. This is information your attorney needs to know. Although this may come out eventually through a surveillance camera that is later discovered by the defense, they would not be permitted to ask either you or your attorney about what you discussed or told each other. That means they would have no means of obtaining this information (from you or your attorney) due to the existence of the attorney-client privilege.
This legal privilege is found to be waived in very few circumstances because it is considered to be so important. Say, for instance, if you call up your friends and tell them what your attorney thinks your case is truly worth or what some of the weak spots in your case are, and the defendant gets wind of this, they would be entitled to take the depositions of your friends to determine exactly what you disclosed to them.
Similarly, the attorney-client privilege only applies if you do not disclose the contents of your conversations with your attorney with a third party, with one exception. Releasing information about your case to a pre-settlement legal funding company does not affect attorney-client privilege.
Why Would a Pre-Settlement Funding Company Need to Speak with My Attorney?
Pre-settlement legal funding companies are only permitted to obtain repayment of the money they extend to borrowers through the settlement or resolution of their lawsuit. This means all pre-settlement funding is non-recourse, i.e. the lender cannot force you to sell your house, repossess your car or trash your credit if you fail to pay them back because you lost your suit.
Given that the lender’s only means of getting repaid is through the resolution of your case, legal funding companies do a tremendous amount of work to ensure the chances that the loan they are extending will be paid back are high once that lawsuit is resolved through a settlement or trial. They will typically take a long, hard look at your lawsuit and its value since your loan will be no more than 10% of what your case is worth.
To put it in perspective, pre-settlement lenders require your attorney to speak to their underwriters and provide your case file to be able to make an informed decision regarding your application for pre-settlement legal funding. Why? Because your attorney is the one who knows the most about your case. The more information that your attorney can and does share with the lender, the better the chances of getting approved for a lawsuit loan.
Waiver Concerns if Your Attorney Shares Confidential Information with a Legal Funding Company
Your attorney needs informed consent from you, the client, before discussing the details of your case with a funding company under the rules of professional responsibility that govern attorneys in the practice of law. That means your attorney will not be disclosing personal case information without your consent.
The good news for anyone interested in receiving pre-settlement legal funding is that your attorney speaking with your potential lender does not result in a waiver of the attorney-client privilege. The lender is required to keep all shared case information confidential. Some will require that your attorney and you both sign a non-disclosure and confidentiality agreement protecting any information shared with them before even speaking to your attorney.
If the issue of your attorney speaking with a pre-settlement legal funding company bothers you, understand that the company’s only method of obtaining repayment of the money they are letting you borrow is through the successful conclusion of your lawsuit or claim.
That said, legal funding companies invest millions of dollars in funding legal claims; thus, they will not share information with the defendant/insurer. In doing so, they would risk your lawsuit resulting in the loss of their investment into your case.
Once you’ve decided to get funding for your pending settlement or jury verdict, you could do so by getting started on your application with Baker Street Funding, which works with the utmost confidentiality. The legal funding process only takes 24 hours, and once approved, you’ll get non-compounding rates capped in the third year of your loan.
Apply for a pre-settlement advance today.