Watching litigation drag on feels like watching paint dry … Wait, the paint is drying on YOUR bank account.
When you’re injured in an accident, chances are you don’t have six months (or even years) worth of living expenses sitting in the bank. Life goes on. The bills continue to arrive. Rent isn’t on hold just because you’re hurt. The insurance company understands this and counts on it.
That’s where lawsuit funding quietly steps in.
Here’s an easy explanation of how it works, when it makes sense and how refinancing options can save plaintiffs even more money on existing lawsuit loan balances.
Let’s jump in!
Here’s what’s covered:
- What Lawsuit Funding Actually Is
- Why Cases Drag On (And What That Costs You)
- When Plaintiffs Turn To Lawsuit Funding
- How To Refinance Existing Lawsuit Loan Balances
- The Mistakes Plaintiffs Make
What Lawsuit Funding Actually Is
Contingency financing is a loan that a plaintiff receives against the future settlement of their lawsuit.
It’s non-recourse, which is a fancy way of saying:
- If you win, you pay it back from the settlement
- If you lose, you owe nothing
That’s the shocker. There’s no monthly fee. There’s no credit check that counts. And you don’t get debt collectors beating down your door if you don’t win. The funder assumes the risk — not the plaintiff.
It’s also not really a “loan” in the traditional sense, despite most people referring to it this way. The funder will assess the strength of the lawsuit, and then advance a portion of their estimate of what the case is worth.
In order to qualify for a lawsuit loan in Pensacola, FL or anywhere else across the United States, you will generally need:
- An active personal injury or civil case
- Legal representation (an attorney working on contingency)
- A case with clear liability and damages
That’s it. No paystubs. No employment verification. No credit score requirements.
Pretty different from a bank loan, right?
Why Cases Drag On (And What That Costs You)
Here’s the harsh reality…
Lawsuits take time. A lot of time.
Bureau of Justice Statistics data says the average tort lawsuit takes 23 months to complete. Cases involving medical malpractice take even longer, averaging about 31 months. That’s nearly three years just waiting around. And that’s the average-case scenario.
Some cases take even longer.
During that time, the plaintiff is often dealing with:
- Stacks of medical bills
- Lost wages from time off work
- Rent or mortgage payments
- Daily living expenses
Insurance companies understand this. They wield delay as a sword. The longer they can drag the case out, the greater the pressure on the plaintiff to accept pennies on the dollar just to make the bleeding stop.
That’s why roughly 95% of personal injury cases settle before trial (many for much less than they’re worth). Plaintiffs take what they can because they can’t afford to wait any longer.
When Plaintiffs Turn To Lawsuit Funding
Lawsuit funding flips that pressure on its head.
Instead of feeling compelled to settle for a penny because the bills are mounting … Plaintiff with funding can wait the insurance company out. Keep the lights on and let their lawyer fight from a position of strength.
Here are the most common reasons plaintiffs reach out for funding:
- Medical bills: Treatment doesn’t pause just because the case is pending.
- Lost income: Serious injuries often mean missed work for months.
- Household expenses: Rent/mortgage, groceries, utilities, transportation — life’s necessities still need to be budgeted for.
- Holding out for fair value: This is the biggest. Funding allows plaintiffs to turn down a bad deal.
Data from the industry supports this conclusion as well. Litigation funding grew to approximately $15.2 billion in recent years — illustrating just how many individuals and companies rely on these services throughout protracted legal proceedings.
It’s not a niche product anymore. It’s a mainstream financial tool.
How To Refinance Existing Lawsuit Loan Balances
Here’s something most plaintiffs don’t know…
You can refinance an existing lawsuit cash advance. If you’re unhappy with your rate/terms. It’s just like refinancing a mortgage or auto loan.
Why does this matter? Well, contingency funding rates can range significantly from one litigation funder to the next. Since the funding grows while the case drags on, small rate differences can equal big dollars.
A refinance can:
- Decrease your effective rate — ie.. allow more money from your settlement to reach your pocket
- Stretch your dollars — allowing you to tap into additional funds should your case be undecided
- Consolidate multiple advances — if you’ve taken funding from more than one company
It works almost identically to your original advance. Your new funder evaluates your case, communicates with your lawyer, and directly reimburses your old funder. You don’t need to pay anything upfront.
It’s a little-discussed strategy that can save plaintiffs thousands of dollars before their case settles.
The Mistakes Plaintiffs Make
Lawsuit funding is helpful, but only if you use it the right way.
Here are the biggest mistakes plaintiffs make:
- Taking too much: The advance grows over time. Take only what you need.
- Not comparing rates: Funders fees range wildly. Always get multiple quotes.
- Skipping the fine print: Read the agreement. Understand how the rate compounds.
- Taking a pass on refinancing: If your rate is high to begin with, you can probably cut your payments significantly by refinancing down the road.
- Not talking to your attorney: Your lawyer needs to know about every advance.
Small changes can have a huge impact on your take-home settlement.
Final Thoughts
One of those tools that no one likes to discuss until they find themselves in need of it is lawsuit funding. For plaintiffs entrenched in a protracted lawsuit, it can mean the difference between accepting a fraction of what your case is worth or holding out for full value.
To quickly recap:
- Lawsuit funding is a non-recourse cash advance against your settlement
- You only pay it back if you win the case
- Cases take longer than most people expect — often 2 to 3 years
- Refinancing existing lawsuit funding can lower your rate and save thousands
- Always compare funders and read the fine print before signing
Lawsuit funding isn’t necessarily the answer for every plaintiff. However, for those who need it most, lawsuit funding can provide the peace of mind of knowing that financial pressure won’t force an unjust settlement.
Buy and take what you want. Tell your lawyer what you did. Plaintiffs that follow those three rules almost always win.
