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Consumer Legal Funding Is a Lifeline for Americans Living Paycheck to Paycheck

By Eric Schuller |
November 17, 2025

Consumer Legal Funding Is a Lifeline for Americans Living Paycheck to Paycheck

The following was contributed by Eric K. Schuller, President, The Alliance for Responsible Consumer Legal Funding (ARC).

In today’s economy, far too many Americans are walking a financial tightrope. New data from the Bank of America Institute shows that 24 percent of U.S. households now spend more than 95 percent of their income on basic necessities such as rent, groceries, utilities and transportation. That number jumps to 29 percent among lower income households.

Even more surprising, this strain is not limited to those on the lower end of the income ladder. A recent report from Fortune found that 41 percent of workers earning between $300,000 and $500,000, and 40 percent of those earning more than $500,000, say they too are living paycheck to paycheck. Lifestyle costs, debt and high inflation have eroded financial resilience even at the upper end of the income scale.

When an unexpected injury occurs, these households do not simply experience inconvenience. They experience crisis. Income stops or drops. Medical bills rise. Transportation becomes a barrier. Childcare becomes more complicated. Daily life becomes harder and more expensive, just as a legal claim begins the long march through the justice system.

This is the reality facing millions of Americans. It is also why Consumer Legal Funding exists.

The Delay Between Injury and Justice Creates Hardship

After an accident, a consumer who has a valid legal claim. But that claim will take time to resolve. Insurance negotiations, medical assessments and legal reviews do not operate on the timeline of rent due on the first of the month. Consumers cannot tell the electric company to wait until their settlement arrives. They cannot tell the landlord that the case is moving slowly. Yet all of those bills continue to accumulate.

For people who already have no financial cushion, even a short interruption in income can be catastrophic. Families fall behind on rent. Utilities get disconnected. Cars fall into repossession. Groceries become unaffordable.

These pressures far too often push consumers into accepting low settlement offers simply to survive. That is not justice. That is coercion.

Consumer Legal Funding Helps Consumers Survive the Wait

Consumer Legal Funding provides consumers with access to a portion of the future proceeds of their legal claim. Those funds help pay for essential daily expenses, such as:

• Rent and utilities
• Groceries and basic household needs
• Car payments and repairs
• Childcare and family necessities
• Transportation to medical appointments

This support is not used to pay attorney fees or litigation expenses. It is used to keep food on the table and a roof over a family’s head. It is, quite literally, the difference between stability and crisis while consumers await a fair resolution.

Equally important, Consumer Legal Funding is non-recourse. If the consumer does not win or settle their case, they owe nothing. No debt is created. No financial penalty follows them. The risk is on the funding company, not the consumer.

In a financial landscape where payday loans, credit cards and title loans can trap people in cycles of debt, Consumer Legal Funding offers a safer alternative that respects their long term financial well being.

Leveling the Playing Field

Consumer Legal Funding gives consumers the ability to withstand delay tactics. It gives them the time they need for their attorney to negotiate properly. It allows the civil justice system to work on the merits of the case, not the desperation of the injured person.

In an economy where both low income and high-income earners are struggling to stay afloat, tools that protect fairness in the justice system have never been more important.

A Necessary Safety Net for a Fragile Economy

The numbers paint a clear picture. Whether someone earns $40,000 or $400,000, far too many Americans are living without a financial buffer. A single injury can create a domino effect that jeopardizes a family’s housing, transportation, health and financial future.

Consumer Legal Funding does not solve every challenge. But it solves one critical one: it keeps consumers stable during the long wait for justice. It prevents them from being forced into unfair settlements. And it protects them from predatory financial alternatives that create long term harm.

In short, it helps Americans in their moment of need.

Funding Lives, Not Litigation

Consumer Legal Funding exists for one purpose: to help people survive while their legal claim makes its way through the system. It allows injured consumers to focus on recovery, not crisis. It restores balance against powerful insurance companies. And it ensures fairness is not compromised because someone cannot afford to wait for what they are rightfully owed.

Consumer Legal Funding is about Funding Lives, Not Litigation. And in an economy where far too many Americans are living paycheck to paycheck, that mission has never been more essential.

About the author

Eric Schuller

Eric Schuller

Consumer

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Independence Day Op-Ed Frames Consumer Legal Funding as the Freedom to Pursue Justice

In an Independence Day editorial, the Alliance for Responsible Consumer Legal Funding (ARC) argues that meaningful freedom includes the ability of injured Americans to pursue their legal claims without financial desperation forcing them into unfair settlements. The piece positions consumer legal funding as a practical tool for keeping the outcome of a case tied to its facts rather than to a plaintiff's bank balance.

Writing in the National Law Review, ARC president Eric Schuller contends that "justice delayed can quickly become justice denied when mounting bills force individuals into decisions they otherwise would never make." Defendants, he argues, understand this dynamic and can use the length of the civil justice process to pressure vulnerable plaintiffs into accepting less than their claims are worth.

Schuller distinguishes consumer legal funding from commercial litigation finance and traditional lending. These are typically small, non-recourse advances — often $3,000 to $5,000 — used for everyday necessities such as rent, groceries, and medical bills while a claim proceeds. Because the funding is non-recourse, a consumer who loses the underlying case owes nothing. ARC's guiding principle, he writes, is "Funding Lives, Not Litigation."

The editorial also makes the case for responsible oversight, endorsing disclosure requirements, attorney acknowledgment, and prohibitions on funders influencing litigation strategy — safeguards intended to protect consumers while preserving their access to the tool.

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In Jackson Hospital Bankruptcy, Funders and Lawyers Sit Ahead of the Hospital in Settlement Waterfall

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As reported by Alabama Daily News, Jackson Hospital filed for bankruptcy and sued Blue Cross, arguing that only higher insurance reimbursement rates can keep the facility open. Its current operations are financed through a debtor-in-possession loan from Jackson Investment Group (JIG).

According to the agreement, any settlement proceeds would follow a strict waterfall: first, JIG's legal expenses; second, repayment of JIG's investment, including accrued and unpaid interest; and only then a split of what remains, with 70% directed to Jackson Hospital Corporation for its obligations to JIG and 30% to a nonprofit of JIG's choosing. The hospital itself effectively ranks third in the payment hierarchy.

The structure highlights a recurring tension in litigation finance: a courtroom victory does not always translate into the outcome a funded party most needs — here, the survival of the hospital. U.S. Bankruptcy Judge Christopher Hawkins has scheduled a status hearing for June 30, leaving the ultimate distribution, and the hospital's future, unresolved.

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As New York’s Litigation Lending Law Takes Effect, a Nonprofit Funder Pushes an Alternative Model

As New York's new consumer litigation lending law takes effect, a Buffalo-based nonprofit is positioning itself as an alternative to the traditional, for-profit funding model the legislation is designed to rein in. The Milestone Foundation, backed by a newly formed advisory council and a client base of roughly 1,000, says its approach is built around reshaping how plaintiffs access funds while their cases are pending.

As reported by Law.com, the foundation is seeking to differentiate itself from conventional consumer litigation lenders, which advance cash to plaintiffs in personal injury and other cases in exchange for a share of any eventual recovery. Critics of that model have long argued that compounding fees can consume an outsized portion of a plaintiff's award, a concern that helped drive New York's move toward tighter regulation.

The timing is notable. New York's law arrives amid a broader national reckoning over consumer legal funding, with several states weighing disclosure requirements, rate caps, and other guardrails on the practice. By advancing a nonprofit alternative as the regulatory landscape shifts, the Milestone Foundation is testing whether a mission-driven structure can coexist with — and compete against — established commercial funders.

The development underscores how regulation and market innovation are increasingly moving in tandem within consumer legal funding. For plaintiffs, lawyers, and funders alike, New York's experience may offer an early indication of how alternative models perform once stricter rules are in place.