As an attorney we are prohibited from advancing money to a client to assist them in lasting through the long years of the litigation.
However, some clients who are injured cannot survive on savings or SSI and often need assistance. CBS 60 Minutes ran a program on December 18, 2022, exploring plaintiffs need for what is called pre-settlement funding and the pros and cons of that funding.
In this blog piece I hope to accurately share with you the information provided by that program and our own views of the subject.
In our practice a client has been injured as a result of the negligence of another individual and suffered debilitating injuries. It might be that returning to work and earning an income are no longer viable options. How does a plaintiff survive during the course of the litigation?
Usually there are sufficient funds from a spouse, from SSI or unemployment to assist them. However, with the COVID pandemic and its continued effect on the Courts, the time it takes from the start of litigation until it ends has been extended by years. Therefore, the need may arise for pre-settlement funding to financially survive the litigation.
Entering into a pre-settlement funding agreement, means that the company will loan the plaintiff money, often times at an exorbitant interest rate. Should the plaintiff win, the company will expect its money back plus the interest that has accrued to the date of repayment. The earlier that they fund a client and the longer that it takes to achieve a result the more money these companies will make. If the plaintiff is unsuccessful, then the company gets no money, as typically have no recourse as to other funds the plaintiff might have.
The potential danger with these agreements comes from the fact that the companies that loan money may not be regulated, their agreements may not be fair, and may be deceptive.
Nevertheless, we recognize that pre-settlement funding can help some of our clients survive the difficulty that comes with enduring a long litigation process. We do not recommend any pre-settlement funding company, but will, to the extent appropriate, assist our clients.
