Qualifying for Personal Injury Loans and Lawsuit Valuation

Pre Settlement Funding

This refers to the act of providing funding prior to a settlement being reached in a pending lawsuit. Since 1999 the pre settlement funding industry has grown steadily and now includes more than 40 funding companies that provide financing in 49 states. If you already have a settlement then you should be seeking “structured settlement funding” in which a company will buy you future settlement payments.

Pre Settlement Funding Can Increase the Value of Your Lawsuit.

Pre Settlement Funding can be used as a tool to increase the value of your legal claim. Most insurance carriers will initially offer a low ball settlement offer to see if the claimant is willing to settle quickly for a low amount. The claimant case apply for a lawsuit loan and use the lawsuit cash to avoid accepting the initial low settlement offer from the insurance carrier and hold out for a higher settlement in the future.

Assuming that the increase in the offer that is received in the future is greater than the fees charged to obtain the pre settlement funding, then the lawsuit cash advance has increased the value of your legal claim. Pre Settlement Funding can also be used to access medical treatment that will increase the economic damages of your legal claim and increase the settlement value of your lawsuit.

A personal injury case will settle for more money if the plaintiff has actually had knee surgery as opposed to settling the case prior to the surgical procedure. Pre settlement funding can be used to pay the medical procedures for those patients that do not have health insurance.

The final way that pre settlement funding can be used to increase the value of your lawsuit or legal claim is by paying for case expenses. If your lawyer will not pay for a needed expert witness or deposition of an important witness then you may want to consider using a lawsuit loan to pay for these expenses as they can increase the settlement value of your personal injury claim.

There is no question that borrowing against your lawsuit can be a risky maneuver, but when you are confident that the settlement value will increase since the pre settlement funding is being reinvested in your case it may be an excellent option.

What Types of Cases Qualify for Pre Settlement Funding?


Pre Settlement Funding is primarily provided to plaintiffs who have personal injury, workers compensation and civil rights cases. I many cases there is a pending legal claim but no actual lawsuit has been filed. The plaintiff has hired a personal injury or lawyer to handle their civil claim and as their claim progresses financing may be needed. We have listed many of the cases that are most suited to receive pre settlement funding.

  • Automobile Accident Loans
  • Auto Accident Loan
  • Work Comp Loan
  • Wrongful Arrest
  • Police Brutality
  • Railroad Accident Loans
  • Jones Act Loans
  • Labor Law 240 Loans
  • Construction Accident Loans
  • Workmans Comp Loans
  • Wrongful Termination Loans
  • Products Liability Loans

Contingency Lawyers and Pre Settlement Funding.

Pre Settlement Funding is only offered to plaintiffs that have hired a contingency lawyer to handle their legal claim. The personal injury lawyer will only get paid if and when the legal claim is successful and monies are distributed.

If there is no recovery from the legal claim or lawsuit then the lawyer does not receive a fee and the lawsuit loan (if provided) does not have to be repaid. A lawsuit loan is one term used to describe pre settlement funding.

The lawyer representing the claimant is not a party to the pre settlement funding agreement but he/she will sign a letter of protection which assures the funding company that the lawsuit loan will be repaid out of the settlement proceeds. The lawyer will not recommend funding and will not be able to guarantee a recovery from the lawsuit to the funding company.

The lawyer simply acts as a trustee to the transaction and agrees that if and when settlement funds are distributed that the pre settlement funding company will get paid back before funds are distributed to the claimant.

In addition to being the trustee to the pre settlement funding transaction, the lawyer will provide factual and legal opinion information to the funding company so they can evaluate the merits of the pending legal claim.  A pre settlement funding is approved or denied based on the merits of the legal claim and has nothing to do with the credit or income of the plaintiff.

A pre settlement loan will often be issued to a plaintiff that has bad credit and/or no income because they are injured. The approval of the lawsuit loan is strictly based of the probabilities of a successful recovery in the pending legal claim.

Therefore any person, regardless of personal credit or income verifications, will qualify for a litigation loan as long as the merits of the lawsuit are strong enough for the pre settlement funding company to issue the cash advance.

7 Factors that Determine Pre Settlement Loan Approval and Amount Funded

  • Liability – Most funding companies look for clear liability in cases.  They want to make sure the defendant in the case is clearly the negligent party
  • Causation – It is very important that the damages were caused by the negligent act whether that be an auto accident or other negligent act
  • Damages – The economic and non-economic damages are evaluated to determine the potential value of the claim
  • Venue – The county and state where the lawsuit will be filed and significantly affect the value based on previous jury verdicts in those venues
  • Date of Loss – The date of loss is an important factor to determine how long the legal claim will take an how much pre settlement funding should be issued
  • Prior Injuries – Pre settlement companies will determine if their were pre existing conditions and reduce the potential value of the claim accordingly
  • Insurance Coverage – There must be adequate insurance coverage for the defendant to issue pre settlement funding.

The factors listed above may vary from company to company but they are the fundamental underwriting principle used to determine pre settlement funding approvals and how much lawsuit cash to provide each applicant.

Each applicant that applies for a lawsuit loan will complete a detailed application via phone or internet and then the pre settlement funding company will use its own proprietary underwriting model to determine if an application will be approved. If the application is approved then the amount will vary based on the damages and insurance coverage available to pay the settlement.

Litigation loans are a form of pre settlement funding and the same criteria listed above is used to determine the fact of the application.