What Happens If a Client Runs Out of Money Before a Settlement Arrives?

As a lawyer, you’re responsible for giving your client the best representation and the best service you can. Sometimes, that means going above and beyond providing legal advice and helping your client get to a better financial position.

It can take a long time for a personal injury case to settle – and even longer for a client to get the money they’re due. Some cases take months, or even longer, to finish.

So what should you do if your clients find themselves in dire financial straits?

Why Financial Issues Are So Common

First, it’s important to understand why financial issues are so common among personal injury clients.

  • Lack of income. One of the obvious factors here is that your client may be totally without income. Many victims of car accidents, workplace accidents, and other personal injuries are injured to the extent that they can’t continue working as they did before. If their household is totally dependent on their personal income, this makes the situation even more difficult to manage. Your client may be able to work part-time, or they may have some savings they can rely on, but combined with the other factors influencing client finances, these may not be enough.
  • Increasing expenses. If the lack of income wasn’t enough, your clients are also typically facing increasing expenses. All their normal, everyday expenses are going to remain the same; they’re still going to be responsible for paying their mortgage, paying for groceries, keeping up with utility bills, and so on. On top of that, they’ll be facing mounting medical bills. Even if they have an insurance policy temporarily covering some of their expenses, these costs can begin accumulating aggressively.
  • The time. Typically, financial problems compound over time. The longer it takes to resolve the financial situation, the worse it’s going to feel. The stack of unpaid bills is going to increase. Debts are going to accumulate compound interest, escalating at an exponential rate. All the while, your clients’ hopes are going to dwindle.
  • Uncertainty. Making matters worse is the uncertainty your clients are going to face. They may have no idea how much of a settlement they’re going to receive, or they may be in the dark about how long it’s going to take to receive that settlement money. If you could promise your client they’re going to receive $25,000 in 8 weeks, they might be able to completely plan around that income. But with little to no information, it gets harder and harder to manage expenses.

Potential Issues

Fortunately, your client’s lack of money isn’t going to affect you or your business much directly. Most personal injury attorneys are paid if and when their client receives a settlement, and your client’s financial situation isn’t going to affect that; if and when they win a settlement, you’re going to get paid.

That said, client financial issues can affect you and your business indirectly.


  • Client stress. Clients in the middle of intense financial distress are going to have a much harder time in negotiations (and potentially, the trial). They may be less available, less compromising, less willing to cooperate, or otherwise more difficult to manage. In a best-case scenario, this will be a slight inconvenience for you. In a worst-case scenario, it could put the entire case in jeopardy.
  • Negotiation impact. People struggling with financial issues may have their judgment clouded, making it harder to carry on productive negotiations. Clients may be motivated to end the negotiations as soon as possible, rushing to a conclusion to get their money faster – rather than aiming to get the biggest possible payout.
  • A bad experience. Even though you, personally, have no influence over your client’s financial situation, if they have a bad experience throughout the case, they might think more negatively about you or your firm. That, in turn, could lead to an influx of bad reviews – and fewer opportunities to get referrals.

How You Can Help

So what can you do to help?

There are several possible options:

  • Provide financial advice. You’re a lawyer, not a financial advisor, so you may not have the qualifications or the confidence to tell your clients how to budget or spend their money. However, you can help them understand their situation as it relates to settlement money and expense management. Even limited direction and reasonable time estimates can help your clients make better decisions.
  • Recommend a settlement advance. Settlement advances are similar to loans. Your client will apply to a settlement advance provider, and assuming they’re approved, they’ll get access to a sum of capital based on their projected settlement amount. They can use this cash for anything; when the settlement comes in, they can pay back the loan, and if they don’t win a settlement, they won’t owe anything.
  • Connect your client to other experts. If you don’t feel qualified or confident to give advice yourself, refer your client to other experts. There may be an advisor or an organization in your network who can help.
  • Push the negotiation (if possible). In some cases, you may be able to relieve your client’s burden by pushing harder in negotiations to close the deal quickly. In many cases, rushing the negotiation process will result in a smaller payout, which isn’t ideal – but it may be in your client’s best interest to close the deal quickly, especially if the case value is low or unable to support pre-settlement funding.
  • Hasten the delivery process. After a settlement is reached, it’s still going to take some time for your client to receive their funds.  If possible, do everything you can to to expedite the delivery of funds once they become available to you.  If receipt of the settlement proceeds is slow and out of your control, you can also seek post settlement funding for your clients as well.

One of the best things you can do for your client, if they’re struggling with financial issues, is recommend a settlement advance. But it’s understandable to be discerning when recommending potential financial partners. If you’re ready to learn more about settlement advances or about our approach, don’t hesitate – contact us at Capital Now Funding today!