Can My Lawyer Deny Me From Getting a Pre-Settlement Loan?
Your lawyer typically has your best interests at heart. They’re fighting on your side to get you the biggest possible settlement – and make sure you’re compensated fairly for whatever injuries or damage you’ve sustained.
However, it’s possible for your lawyer to give you advice that you don’t understand, or don’t agree with. For example, they may advise you not to take out a pre-settlement loan. But why would a lawyer prevent you from getting access to this money? And do they have the power or authority to stand in your way?
What Is a Pre-Settlement Loan?
Pre-settlement loans provide you with direct cash while you’re waiting for your case to resolve and your settlement to become available. You’ll get an injection of money, and when you receive a settlement, you can pay back the loan plus any fees or interest. If you don’t receive a settlement, you won’t owe anything.
There are several advantages to this, including:
- Immediate financial relief
- A sense of confidence
- More time to negotiate
- Less stress
Why Would a Lawyer Object?
With all these potential advantages, why would a lawyer object to you getting a pre-settlement loan? Your lawyer isn’t trying to sabotage you or prevent you from getting the help you need. Instead, your lawyer likely has one (or more) potential concerns.
- High interest rates. Some lawyers are concerned about the high interest rates that may be associated with pre-settlement funding – and for good reason. Many funding providers do charge a high interest rate, which can compound over time. If you’re not careful with these loans, you could end up owing much, much more than you originally borrowed, putting you in a worse financial situation (instead of a better one). These loans border on predatory and should be avoided. However, not all loans charge an interest rate and those that do may be reasonable. If you have the choice, look for a settlement advance that charges a transparent fixed fee rather than an interest rate.
- Lack of regulation. Lawyers may also be suspicious of pre-settlement loans because of the lack of regulation in the industry. Mainstream financial institutions and most types of loans are heavily regulated by the government, but because pre-settlement loans fall into ambiguous territory and are relatively new, they’re not subject to as strict regulations. However, there are many viable, legitimate options available to plaintiffs.
- Confidence in the case. Your lawyer probably wouldn’t take on your case if they didn’t believe it had a good chance of winning a settlement – but they might still be concerned that you won’t win a settlement, thereby rendering you unable to pay the loan back. But here’s the good news; most pre-settlement loans are non-recourse, meaning if you don’t win a settlement, you won’t owe anything to your lenders.
- Sheer novelty. Pre-settlement loans are a relatively new financial product, and because of that, there are still many people who don’t understand them fully (or understand how they work). If your lawyer is confused, or if they’re generally skeptical about such a product, they may be unwilling to vouch for it.
- Untrustworthy sources. Unfortunately, there are a lot of sketchy providers of pre-settlement funding available. These companies attempt to take advantage of plaintiffs, rather than serving them. However, there are also many legitimate, well-intentioned providers who provide fair pricing, transparent information, and excellent customer service.
- Ethical concerns. Lawyers must adhere to a number of ethical obligations, or risk disbarment. Accordingly, most lawyers operate conservatively and carefully. They don’t take actions on behalf of their clients unless they’re absolutely confident that they’re complying with those ethical standards. If your lawyer doesn’t have all the information, or if they just want to play it safe, they may advise against taking on pre-settlement loans.
- Timeline confidence. In rarer cases, you may encounter a lawyer who feels confident in a fast timeline. If they think the case is going to settle in a short period of time, and that you’ll receive your settlement soon, they may see an advance as wholly unnecessary.
Can Your Lawyer Stop You?
Your lawyer can provide you with information and/or advise you not to take out this type of loan. However, they can’t really stop you from taking out a loan. The company may contact your lawyer for information on the case, but your lawyer will not have a direct say on whether or not you’re approved for funding. In the end, it is the funding company and their underwriters that make the decision to fund or not. However, if your attorney is against funding and unwilling to provide the information needed by the funding company, it can make it very difficult for the funding provider to approve your for funding.
Making the Right Decision
Getting a pre-settlement loan is still a big financial decision, so it’s important to take it seriously.
Here’s how you can make a better decision:
- Do your own research. Take your time and learn about the different types of pre-settlement loans that are available. Become familiar with the terminology and the typical approaches to this financial product.
- Talk to different experts. Definitely talk to your lawyer and see what they have to say about pre-settlement loans. You should also consider talking to other experts, such as other lawyers or financial advisors you trust.
- Scrutinize your lenders. There are some unscrupulous settlement lenders out there – but they’re easy to spot with a little research. Talk to an agent about your options and look for customer reviews and testimonials.
- Understand the terms and conditions. Before accepting any pre-settlement loan, make sure you understand the terms and conditions. How much are you going to owe? When will you owe it? Are there any hidden fees?
- Have a financial plan. How are you going to use the money? Do you have a plan to pay the money back? The more prepared you are, the better.
Wherever you are in the legal process, the first step to getting a pre-settlement loan is applying – and the application only takes a few minutes of your time. Apply for pre-settlement funding with Capital Now Funding today, and see how much of a loan you qualify for!