Can a Lawyer Stop You From Getting Pre-Settlement Funding?
If you find yourself waiting on money while filing a personal injury claim, pre-settlement funding can provide some much needed short-term cash flow to tide you over. But can your attorney block this from happening?
What is Pre-Settlement Funding?
Pre-settlement funding is money that a company provides in exchange for a portion of the proceeds that you expect to receive in the future once your case is settled. Once this money is paid out, the lending company receives a portion of the settlement, just as your attorney does.
Typically, you’re able to receive up to 15 to 20 percent of the estimated settlement value in the form of pre-settlement funding. And while it sounds a lot like a loan, you’re not technically incurring any debt.
In legal terms, this is known as “non-recourse” funding, which means you’re only required to pay back the money you receive if and when your case settles. If the case is not settled, you don’t owe anything. The money they provided is yours to keep.
Most pre-settlement funding companies charge an interest rate based on the amount they give you, as well as other factors related to the strength of your case and the likelihood of a settlement. However, some companies – like Capital Now Funding – operate on a fixed fee basis.
This means the fee on the “loan” is the same regardless of whether it takes six months or five years to settle.
You Must Have a Lawyer to Apply for Pre-Settlement Funding
In order to qualify for a pre-settlement loan, you’ll need to satisfy a series of basic requirements that are set in place by the company providing the funding. One of these requirements is that you must have an attorney. This means you cannot represent yourself and obtain legal funding.
Companies put this requirement in place because of the risk involved. As noted above, their only way of getting their money back is if you receive a settlement. And if you choose to represent yourself, they view this as a significant risk that could result in a botched settlement, or much lower payout.
Having an attorney adds to the legitimacy of your case and increases your chances of reaching a sizable payout.
Can Your Lawyer Stop You From Getting Funding?
Any reputable legal funding company will not only require you to have an attorney, but they’ll also require the attorney to be involved in the process. For example, they’ll need to:
- Provide case-related details. The legal funding company needs to gather facts about the case in order to make an educated assessment of the case’s worth, as well as the likelihood that a positive settlement will be reached. This requires them to access all legal documents and medical records. Your lawyer must be cooperative in supplying these documents from your case file.
- Disperse funds from the settlement. The legal funding company gets paid directly from the proceeds of the settlement. Once a settlement is reached, funds are transferred from the defendant/insurance company over to your lawyer. The attorney then distributes the proceeds accordingly (keeping their fee, reimbursing the legal funding, and directing the rest to you).
So, back to the question: Can your lawyer stop you from getting pre-settlement legal funding? The answer is no, they cannot. They are required to be cooperative. However, they also have an ethical obligation to act as an advocate for your best interests. That means they’ll explain the pros and cons and give you their opinion of whether or not it’s the right move for you given the circumstances of your case.
If your attorney refuses to cooperate with the legal funding process, you may need to find yourself a new lawyer who will respect your rights and let you make your own choices.
Just remember, at the end of the day, it is the funding company and their underwriters that are making the approval decision. Just because you don't get approved, doesn't mean that your attorney didn't cooperate or that you have a bad case. It just means that your case may need to develop more before a funding company will feel comfortable investing their own money into your case.
Working With Your Attorney to Find the Best Legal Funding
A good attorney will provide helpful counsel on how to evaluate and choose the right legal funding. They may advise you on things like:
- Which companies you should work with and which ones you should avoid.
- How to evaluate the total cost of legal funding (interest rates vs. fixed fees, etc.).
- How much to safely accept without adversely affecting your case.
- Ways to determine the ideal timing for your pre-settlement funding.
Don’t be frustrated if your attorney asks questions and offers feedback on the best way to approach legal funding. As long as they aren’t trying to stand in the way of you applying for legal funding, you should welcome their feedback and counsel.
Apply for Pre-Settlement Funding Today
At Capital Now Funding, we approach pre-settlement legal funding with a unique strategy that stands in stark contrast to what most of the industry offers. That’s because instead of charging a high interest rate (as most companies do), we operate on a no-risk, fixed fee basis that means the cost of your legal funding never increases, regardless of how long it takes for your case to be settled.
Getting legal funding from Capital Now Funding is as easy as 1-2-3:
- Step 1: You Apply. Fill out this short online form or give us a call at 1-855-CAP-FUND and we’ll get the process started in just minutes.
- Step 2: We Approve. Our team of experienced legal funding experts will review the specific details of your case and may be able to approve you for funding in as little as 24 hours. And because this is not a loan, we don’t need to check your credit score, income, or your pre-existing debt-to-income ratio. Everything is evaluated based on your case. If you’re approved, we’ll send over a simple form that you can sign digitally.
- Step 3: You Receive Funds. Once the application is approved, you’ll receive your funds in a matter of hours. We can send funds via ACH or direct deposit, same-day wire, or standard check via UPS overnight).
Over the years, thousands of clients have trusted Capital Now Funding with their finances. Apply now and we’ll get the process started!