The amount of pre-settlement funding you can receive depends on several factors, including the specifics of your case, the anticipated settlement amount, and several other factors. Let's dive deep into the details to help you understand how pre-settlement funding amounts are determined and what you can expect when applying for this type of financial support.
What Is Pre-Settlement Funding?
Before exploring the factors that influence the amount you can borrow, it's essential to understand what pre-settlement funding is. Pre-settlement funding, also known as lawsuit funding or litigation financing, is a cash advance provided to plaintiffs based on the expected value of their legal case.
Keep in mind that pre-settlement funding is a non-recourse advance, meaning you only repay the advance if you win your case. If you lose, you owe nothing. Legal funding allows you to repay the funds only if your case results in a successful settlement or verdict. The amount of funding you qualify for may vary, and the approval process is designed to accommodate your unique situation, subject to final review and discretion.
Key Factors Influencing The Amount You Can Borrow
The amount of pre-settlement funding you can receive isn't a fixed number. It varies from case to case, depending on a variety of factors. Let's explore the most critical elements that funding companies consider when determining how much you can borrow.
Type Of Case
The type of legal case you're involved in is critical in determining how much pre-settlement funding you can receive. Different types of cases carry varying levels of risk, potential settlement amounts, and timelines, all of which influence the funding decision.
Auto Accident
Auto accident cases are among the most common personal injury claims. They generally involve clear liability and insurance coverage, making them more straightforward for funding companies to evaluate. If your case involves an auto accident with clear evidence and liability, you may qualify for a higher advance, especially if the injuries are severe and the potential settlement is significant.
Personal Injury
Personal injury cases encompass many scenarios, including injuries caused by negligence, defective products, or other accidents. The strength of your injury case, including the extent of your injuries, the clarity of liability, and the potential for a favorable outcome, will play a significant role in determining your funding amount. Strong personal injury cases with substantial damages typically qualify for higher funding amounts.
Slip & Fall
Slip and fall cases can vary widely in terms of liability and damages. Funding companies will carefully assess the evidence in these cases, such as whether the property owner was negligent and the severity of the injuries sustained. If your slip-and-fall case is strong and supported by compelling evidence, you may receive a funding offer that reflects the potential settlement amount.
Medical Malpractice
Medical malpractice cases are often complex and involve significant damages, making them prime candidates for pre-settlement funding. However, these cases can also be lengthy and contested so we will evaluate the strength of the evidence, expert testimony, and the history of similar cases. If your medical malpractice case is well-supported, you may be eligible for a substantial advance.
Workers' Compensation
Workers' compensation cases involve claims by employees injured on the job. State-specific laws often govern these cases and can vary in complexity. Funding companies will consider the strength of your claim, the extent of your injuries, and the likelihood of a favorable outcome when determining your funding amount. Strong workers' compensation cases with clear liability and significant damages may qualify for higher funding.
Commercial Litigation
Commercial litigation cases involve business disputes, such as breach of contract, intellectual property disputes, or partnership disagreements. These cases can involve large sums of money and complex legal issues, making them suitable for pre-settlement funding. We will evaluate the case's merits, the potential for a significant settlement, and the parties' resources before determining the funding amount.
Other Cases
If your case doesn't fall into one of the categories above, you may still be eligible for pre-settlement funding. We will assess your case on its merits, considering liability, damages, and the potential for a favorable outcome. Even if your case type is less common, you may still qualify for an advance based on the specifics of your situation.
Estimated Settlement Value
Your estimated settlement value is the most significant factor influencing the amount of pre-settlement funding you can receive. Funding companies must ensure their advance is proportional to the expected settlement amount. Typically, we will advance a portion of the anticipated settlement - often around 10% to 20% of the estimated value.
For example, if your attorney estimates that your case could settle for $100,000, we might offer you between $10,000 and $20,000 in pre-settlement funding. This range helps protect you and us, ensuring you receive sufficient funds to cover your needs without borrowing more than your eventual settlement can support.
Stage Of The Legal Process
The stage of your legal case can also impact the amount of pre-settlement funding you can obtain. Cases closer to resolution, such as when a settlement offer has already been made, or a trial date is imminent, may qualify for higher funding. This is because we have more information on which to base its decision and can better assess the likelihood of a successful outcome.
In contrast, cases still in the early stages, such as those that have just been filed or where discovery is ongoing, may result in lower funding offers. There are still many unknowns at this stage, and we may adopt a more cautious approach.
Strength Of The Case
The strength of your case is another crucial factor that funding companies evaluate when determining the amount of pre-settlement funding you can receive. A strong case with clear evidence, liability, and damages is more likely to result in a favorable settlement or verdict, which means we may be able to offer a larger advance.
On the other hand, if your case is less certain - perhaps due to weak evidence, complex legal issues, or disputed liability - we may be more conservative in its assessment. In such cases, the amount of funding you're eligible to receive may be lower to account for the higher risk.
Involvement Of Insurance Companies
The involvement of insurance companies in your case can also affect the amount of pre-settlement funding you receive. Insurance companies are often involved in personal injury cases, workers' compensation claims, and other types of lawsuits where a settlement is likely to be paid out by an insurer. The presence of a well-established insurance company with a history of settling claims can provide additional assurance that a settlement is likely, potentially increasing the amount you can borrow.
However, if your case involves an uninsured or underinsured defendant or the insurance company is known for aggressively contesting claims, we may be more conservative in its assessment, resulting in a lower funding offer.
Attorney Cooperation
Your attorney's involvement in the pre-settlement funding process is crucial. Funding companies rely on information provided by your attorney to evaluate your case and determine how much funding to offer. Attorneys who are responsive and cooperative can help facilitate a smoother and quicker funding process, which may result in a higher funding offer.
If your attorney is experienced in handling cases like yours and has a successful track record, this can also positively influence the our decision, potentially leading to a more favorable funding amount.
Previous Funding
First Application
If this is your first time applying for pre-settlement funding, you may be in a strong position to receive an advance, especially if your case is solid and the potential settlement amount is significant. Funding companies often view first-time applicants as a lower risk because there are no prior liens or advances against the settlement. This clean slate can lead to a more favorable funding offer.
Previously Explored Funding Options
If you've explored funding options but have not received any advances, you will still be considered for funding. The key is to provide a clear understanding of why previous funding wasn't pursued or granted. If your case has evolved since you first considered funding, and it now shows better prospects for a successful outcome, you may receive a competitive funding offer.
Need Additional Funding
If you've already received pre-settlement funding and are seeking additional funds, we will closely evaluate the current status of your case, the amount of the previous advance, the remaining potential settlement amount and whether there's enough room to provide more funding without over-leveraging the final settlement. If your case has progressed positively since the initial advance, you may qualify for additional funding, though the amount might be adjusted based on the remaining settlement potential.
Already Received A Substantial Advance
If you've previously received a substantial advance, we will carefully assess the remaining potential settlement value and the risk of overburdening your case with debt. In such situations, additional funding may be more challenging, and any offer you receive might be more conservative. However, it's important to note that transparency about how the previous funds were used and the current state of the case can significantly improve your chances of securing additional funding.
Your Financial Needs
While the estimated settlement value and the strength of your case are the primary determinants of how much funding you can receive, your personal financial needs also play a role. During the application process, you'll typically discuss your financial situation with us, including the expenses you need to cover while you wait for your case to resolve.
We may offer an advance that aligns with your immediate financial needs, ensuring you have enough to cover essential expenses like medical bills, rent, and living costs without borrowing more than necessary. In some cases, you may be offered additional funding later on if your case progresses and your financial needs increase.
How To Maximize Your Pre-Settlement Funding Amount
If you're considering pre-settlement funding and want to maximize the amount you can borrow, there are several steps you can take:
Work With An Experienced Attorney
Choosing an experienced attorney specializing in cases like yours is one of the best ways to strengthen your case and increase the amount of pre-settlement funding you can receive. A knowledgeable attorney can build a compelling case, provide accurate estimates of your settlement value, and effectively communicate with us.
Strengthen Your Case
Work closely with your attorney to build a strong case. Gather all necessary evidence, document your damages thoroughly, and ensure your legal strategy is sound. The stronger your case, the more likely you will qualify for funding.
Provide Complete & Accurate Information
When applying for pre-settlement funding, it's important to provide complete and accurate information about your case. This includes all relevant documentation, including medical records, accident reports, and legal filings. The more detailed and comprehensive your application, the better we can assess your case and determine a fair funding amount.
Consider Multiple Funding Offers
It's a good idea to apply for pre-settlement funding from multiple companies and compare the offers you receive. Different funding companies may have different criteria for evaluating cases and may offer varying amounts of funding. By comparing offers, you can choose the one that best meets your financial needs and provides the most favorable terms.
Negotiate The Terms
Feel free to negotiate the terms of your funding offer. If you believe that the initial offer is too low or that the fees and interest rates are too high, discuss these concerns with us. We may be able to adjust the offer to better meet your needs.
The Risks Of Borrowing Too Much
While borrowing as much as possible may be tempting, it's important to remember that these advances come with fees and interest that will reduce your final settlement amount. Borrowing more than you need can lead to a situation where the repayment amount significantly cuts into your settlement, leaving you with less money than expected once the case is resolved.
To avoid this risk, carefully assess your financial needs and borrow only what you require to cover essential expenses. By being mindful of how much you borrow, you can protect your final settlement and ensure that you have sufficient funds left over after repayment.
Summary
Determining how much pre-settlement funding you can receive depends on several factors, including the type of case you're involved in, the estimated value of the settlement, the strength of the case, the stage of the legal process, and your personal financial needs. These needs could include medical bills, living expenses, or other costs you need help to cover due to your legal situation and your previous history with pre-settlement funding.
Whether you're applying for the first time or seeking additional funding, it's vital to work closely with your attorney to ensure that the advance you receive aligns with your financial needs and the likely outcome of the case.
By understanding the factors that impact eligibility for pre-settlement funding and working closely with an attorney, you can maximize the amount of funding you're eligible for while minimizing the impact on your final settlement. This knowledge will better prepare you for the application process, which typically involves submitting the case details, financial needs, and other relevant information, and help you maximize the financial support available to you during your legal battle.
While pre-settlement funding can be a lifeline during a challenging time, it's equally important to borrow responsibly. Understanding the long-term implications of the advance is crucial. By carefully weighing these options and making informed decisions, you can secure the financial support without compromising the outcome of the case, empowering you to take control of your financial situation.