Complete Guide
How Pre-Settlement Funding Works: A Plain-Language Guide
Pre-settlement funding goes by several names: lawsuit cash advance, settlement advance, legal funding, lawsuit loan, or litigation funding. These terms generally refer to the same arrangement — you receive cash now based on your pending case, and repayment comes from your settlement later.
The key characteristics that define pre-settlement funding:
Pre-settlement funding is designed for plaintiffs in active civil cases who are facing financial pressure while their case moves through the legal process. It is most commonly used in personal injury cases — car accidents, slip and fall, medical malpractice, workers' compensation, and similar matters.
The Basics
What Is Pre-Settlement Funding?
- Non-recourse: Repayment is tied to case proceeds only. If there is no recovery, there is no repayment obligation.
- No credit check: Eligibility is based on the strength of your case, not your financial history.
- No monthly payments: You do not make installment payments. The advance and associated costs are repaid in a single transaction from your settlement.
- Attorney coordination required: Your attorney must be involved and must acknowledge the funding agreement before funds are issued.
How It Works
The Pre-Settlement Funding Process: Step by Step
Step 1: Apply
The process starts with a short application. You provide your contact
information, the type of case, the incident date and state, your
attorney's information, and the amount you are requesting. Most
applications take five minutes or less.
At this stage, you do not need to provide legal documents, medical
records, or case files. Caseflow gathers that information directly from
your attorney in the next step.
Step 2: Case Review with Your Attorney
After you apply, Caseflow contacts your attorney to gather the case
information needed for underwriting. This typically includes:
Your attorney plays an important role in this step. They verify case
facts, provide documentation, and ultimately must acknowledge the
funding agreement before any funds can be issued. If your attorney has
concerns about the agreement or the process, those should be addressed
before you proceed.
- Confirmation of the case type, incident details, and current status
- Liability information — who is at fault and what evidence exists
- Injury documentation — medical records, treatment status, and prognosis
- Insurance coverage — what policies are available and their limits
- Existing obligations — medical liens, prior funding, or other claims against the settlement
Step 3: Underwriting and Offer
Caseflow reviews the case information and determines whether an advance
is available and in what amount. If an offer is available, you receive a
proposed advance amount, the repayment terms, and the full funding
agreement to review.
There is no obligation to accept the offer. You are free to review it
with your attorney, ask questions, and take time before deciding. If you
decline, there is no cost and no penalty.
Step 4: Agreement and Funding
If you choose to accept the offer, the agreement is finalized —
typically requiring signatures from you and an acknowledgement from your
attorney. Once the paperwork is complete, funds are sent. Caseflow aims
to fund within one to two business days of a completed, signed
agreement.
Funds are typically sent via wire transfer or check, depending on your
preference and circumstances.
Details
What Does Non-Recourse Mean?
Non-recourse is the most important concept to understand in a pre-settlement funding agreement. It means the funding company's right to collect repayment is limited to the proceeds of your specific case.
In practical terms: if your case does not produce a recovery — whether because it was lost at trial, dismissed, or otherwise did not result in proceeds — you keep the money you received and owe nothing back. The funding company cannot:
- Garnish your wages
- Access your bank accounts
- Place a lien on your personal property
- Report the unpaid amount to credit bureaus
- Pursue you personally for any remaining balance
This is the fundamental difference between pre-settlement funding and a traditional loan or cash advance. A traditional loan requires repayment regardless of the outcome. Non-recourse funding does not.
Confirm that any pre-settlement funding agreement you are considering is explicitly non-recourse before signing. Ask your attorney to review the agreement if there is any uncertainty.
Details
How Is the Funding Amount Calculated?
The funding amount is not a fixed formula. It is based on the expected net value of your case — what your case is likely to recover, minus the obligations that will be paid from those proceeds before you receive anything.
Factors that affect how much funding may be available:
- Case value: The expected total recovery based on injuries, liability, and available insurance
- Attorney fees: Your contingency fee arrangement is factored into the net recovery calculation
- Medical liens: Provider liens reduce the net amount you receive and are accounted for
- Prior funding: If you have received prior advances on the case, those are deducted
- Case stage: Earlier-stage cases carry more uncertainty; later-stage cases closer to settlement may support higher advances
As a general rule, most funding companies will advance a portion of the expected net recovery — not the full expected settlement value. This protects both the plaintiff and the funding company, since settlement values can change and cases can be delayed.
The most useful approach: request the amount you actually need — the minimum that relieves the financial pressure you are facing. You are not required to maximize the advance, and smaller advances mean smaller repayment amounts at settlement.
At Settlement
How Repayment Works at Settlement
Repayment of a pre-settlement advance does not involve monthly bills or automatic payments. It happens in a single transaction at settlement, typically handled by your attorney.
The settlement distribution process generally follows this order:
1. Settlement proceeds are received and held in your attorney's trust account
2. Attorney fees and litigation costs are deducted per your fee agreement
3. Medical liens and other priority obligations are resolved
4. Pre-settlement funding repayment is sent to the funding company
5. The remaining balance is distributed to you
The repayment amount includes the advance you received plus the agreed costs — as specified in your funding agreement. This total should be clearly stated in the agreement before you sign. If it is not clearly stated, ask for a repayment schedule or table that shows what you will owe at settlement.
Key question to ask before signing: 'What is the exact total I will owe from settlement proceeds, and does that amount change based on how long the case takes?'
At Settlement
What to Look for When Choosing a Pre-Settlement Funding Company
Not all pre-settlement funding companies are structured the same way. Before applying with any company — including Caseflow — understand the key factors to compare:
- Total repayment amount: Compare the total you owe at settlement, not just the advance. The spread between the advance and the total repayment is the true cost of the funding.
- Compounding vs. flat fees: Some agreements use a flat total repayment; others use compounding rates that increase the longer the case takes. Compounding agreements can result in much higher total costs for slow-moving cases.
- Upfront disclosure: All fees and costs should be clearly disclosed before you sign — not buried in footnotes or revealed after you receive the funds.
- Attorney review: A reputable funding company will encourage (or require) your attorney to review the agreement. Be cautious of any company that discourages attorney involvement.
- Non-recourse confirmation: Verify explicitly that the agreement is non-recourse — that you owe nothing if you lose.
- Response time: In an emergency financial situation, how quickly the company moves matters. Ask about typical review and funding timelines.
Caseflow will walk through the offer with you before you commit. Ask any questions you have — there is no pressure to accept, and no cost to apply.
Q&A
Frequently Asked Questions
How does pre-settlement funding work?
Pre-settlement funding works in three steps: you apply with your case details and attorney information, the funding company reviews your case with your attorney, and if an offer is available, you review the terms and decide. If you accept, funds are sent. Repayment comes from your settlement if you win — if you lose, you typically owe nothing.
What does non-recourse mean in pre-settlement funding?
Non-recourse means the funding company can only collect repayment from your settlement proceeds. If your case does not result in a recovery, the company cannot pursue your wages, bank accounts, or personal assets.
How is the pre-settlement funding amount calculated?
The funding amount is based on the expected value of your case, minus existing obligations like medical liens and attorney fees. Key factors include injury severity, liability strength, available insurance coverage, and the stage of the case.
When do I have to repay pre-settlement funding?
Repayment happens at settlement, from your settlement proceeds. You do not make monthly payments. Your attorney typically handles the repayment distribution as part of the settlement process.
What is the difference between pre-settlement funding and a lawsuit loan?
The terms are often used interchangeably. However, pre-settlement funding is typically non-recourse — you owe nothing if you lose. A traditional loan requires repayment regardless of outcome.
How long does the pre-settlement funding process take?
Caseflow aims to complete most reviews within 24 hours. Funds are typically sent within one to two business days of a completed review and signed agreement.
What should I compare when choosing a pre-settlement funding company?
Compare the total repayment amount, whether fees compound over time, how clearly all costs are disclosed, how quickly the company responds, and whether your attorney can review the agreement before you sign.
Can I get pre-settlement funding more than once on the same case?
Yes. Multiple rounds of funding on the same case are possible. Each request is reviewed individually, accounting for any prior funding and the remaining expected net recovery.
Complete Guide
Ready to Apply?
If you have an active case and need help covering expenses while it moves through the legal process, Caseflow can review your application and respond within 24 hours. No credit check. No monthly payments. No obligation to accept.