Pre settlement funding is one of the two lawsuit settlement funding methods, in which a person who has filed a compensation case can get money in the form of a non-recourse loan from the pre-settlement funding company based on his pending case. Even if the amount of the settlement or judgment is less than the estimate, the amount to be paid shall never exceed the amount of the injured person's share of the judgment. Pre-settlement funds include financing ongoing litigation rather than purchasing legal fees after settlement. The risk is much higher in pre-settlement funding as compared to post-settlement funding and hence pre-settlement companies expect very high returns.
A plaintiff in need of money contacts a pre-settlement financing company, sometimes at the suggestion of an attorney. The Pre Settlement Funding Company contacts the lawyer handling the case and obtains information about the case. Based on this information, the loan company values the settlement or judgment and provides a cash advance to the injured person. The loan and related charges are paid to the finance company once the matter is resolved.
For pre-settlement funding, the decision can take years, which substantially reduces the amount that the finance company can pay to the client. Pre-settlement funding companies are unlikely to offer funds to plaintiffs who do not have strong cases justifying substantial awards.