More Americans than ever are living paycheck to paycheck. With inflation rising and a recession right around the corner—financial pressures on the average family are increasing. And lawsuits aren’t going anywhere, which is why Consumer Legal Funding is a vital and necessary option for average families seeking justice in a legal setting. Yet regulation threatens the availability and effectiveness of Consumer Legal Funding—with the potential to curtail justice for those of modest financial means. What Exactly is Consumer Legal Funding? Consumer Legal Funding is one of two common types of third-party legal funding. While Commercial Litigation Finance focuses on big-ticket commercial claims like insolvencies, IP, antitrust cases, etc.—Consumer Legal Funding exists to advance smaller cases impacting average individuals. Consumer Legal Funding cases may include personal injury, medical malpractice, contesting invoices, and other torts (cases where plaintiffs are trying to right a wrong done to them—often by a larger entity). Like Commercial Legal Funding, Consumer Legal Funding is offered on a non-recourse basis. This means:
Collateral is not required to secure funding
Money deployed is not paid back unless the case is successful
Funders are taking on most or all of the financial risk
Once deployed, funds from Consumer Legal Funding, also called Pre-Settlement Advances, can be used to cover non-legal expenses like rent or mortgage payments, medical bills, or groceries. This is of particular value to individuals who have been injured and are unable to work. At its core, third-party litigation funding is focused on increasing access to justice. In order to accomplish this goal, funders must make a profit for their investors. With that in mind, the higher potential for large awards makes Commercial Legal Funding more attractive to funders. This leaves Consumer Legal Funding struggling for mainstream acceptance and a wider client base. How likely is it that Consumer Legal Funding will grow and flourish due to financial stressors like COVID, an impending recession, and rampant inflation? The answer may depend on what happens regarding proposed increases in regulation across many jurisdictions. Do Americans Really Need Consumer Legal Funding? When we look at the statistics, it’s clear that there’s a need for third-party funding entities that focus on individuals and families. Some measures show economic recovery post-COVID. Unemployment numbers are falling, while the GDP is rising. At the same time, inflation has reached a staggering 8.5%, leaving nearly a third of adults in the US using credit cards and even loans to make ends meet between paychecks. In several states, more than half of adults have difficulty meeting monthly expenses due to loss of income. These include:
New York
Florida
Mississippi (with a staggering 70+%)
Nevada
Arkansas
Oklahoma
New Mexico
Louisiana
Alabama
New Jersey
Hawaii
West Virginia
California
Texas
South Carolina
Families are increasingly facing food insecurity and falling behind on rent or mortgage payments—which in turn can lead to homelessness. Additionally, about 2/3 of Americans do not have enough money set aside to cover an unexpected expense of $500. A necessary car repair, emergency room visit, or home appliance failure can set a family or individual back months. These circumstances can take a toll on health as well—with more than 80% of those with financial stress experiencing clinical anxiety. Over half of those dealing with chronic financial worry suffer from depression. When an emergency arises through no fault of a plaintiff, seeking legal recourse may be the only way to avoid destitution. The statistics on personal injuries in the US are sobering to say the least.
31 million Americans are injured and require medical treatment annually.
Of those, 2 million require a hospital stay.
Truck accidents alone account for 5,000 deaths and 60,000 injuries annually.
Medical malpractice is involved in nearly 100,000 deaths a year.
But as legal costs rise and the timing of court cases remains unpredictable—not everyone has access to the legal remedies they seek. That’s why Consumer Legal Funding is so important. It’s also why the industry shouldn’t be watered down by unnecessary regulations. Who is Pushing for Increased Regulation of Consumer Legal Funding? As one might expect, the insurance industry has been the most vocal about regulating Consumer and Commercial types of Litigation Finance. There’s a particular focus on Consumer Legal Finance—perhaps in part because a wronged or injured individual may appear more sympathetic to juries or judges. In practice, Consumer Legal Funding leads to more meritorious cases being filed, with more and larger awards that insurers must then pay. While insurers can then offset these payouts by charging higher premiums, this can still impact the insurer’s bottom line as policyholders balk at rate increases. What States are Already Passing Increased CLF Regulations? Interestingly, the states listed above as those where citizens are financially struggling the most have significant overlap with those states that have already passed regulations controlling Consumer Legal Funding. These include:
Tennessee
Arkansas
Nevada
West Virginia
We see that in many cases, states with residents hit hardest by financial woes are also those imposing restrictions on the use of CLF. West Virginia and Arkansas, for example, have 18% and 17% rate caps, respectively. West Virginia ranks 6th nationally in terms of states with the highest poverty rate, just behind Arkansas at number 5. As this dichotomy obviously harms average Americans, we have to wonder—who exactly are such regulations designed to help? When posed with a question like this, we like to “follow the money.” Who is lobbying for such onerous regulations? The most prominent and powerful organization behind the push for CLF regulation is the U.S. Chamber of Commerce. The Chamber has been issuing a full court press against the Consumer Legal Funding industry (and to a somewhat lesser extent, the Commercial Litigation Finance industry) for years now, at both the state and federal level. And the reason the U.S. Chamber is so adamantly opposed to litigation funding? Two words: Big Insurance. Insurance companies are some of the lead backers of the Chamber of Commerce, and Big Insurance pays a hefty price when individuals have the means to bring cases to completion, and see larger payouts as a result. Insurance companies are incentivized to encourage swift endings to legal claims, where plaintiffs accept lowball offers in return for dropping their case. That is much less likely to happen if the plaintiff has access to Consumer Legal Funding. Remember, this funding is non-recourse, and can be spent on anything the plaintiff desires—rent, food, gas money, Christmas presents, etc. Less impecunious plaintiffs are less likely to settle for lowball offers, and that puts Big Insurance in a great big bind. With some wins under its belt in the aforementioned states, the Chamber is likely to continue its push for industry regulation for the foreseeable future. This has prompted the industry to come to the table on what it deems ‘common sense regulation.’ The Alliance for Responsible Consumer Legal Funding (ARC) – one of two industry trade groups – supports regulations that make CLF safer and easier for consumers to understand. Rather than focusing on fee caps or disclosure minutia, ARC is focused on industry best practices and on clearly spelling out the rights and obligations of those who use Consumer Legal Funding. This includes:
Disallowing referral fees, commission, or other adjacent payments such as experts or industry professionals giving testimony.
Prohibiting funders advertising in ways determined to be misleading or outright false.
Outlining Right of Recission provisions.
Ensuring that all fees and costs be reflected in written contracts, including recovery ownership of clients and funders.
Precluding third-party funders from decision making with regard to settlements or case strategy.
Requiring that funds be used for household needs rather than legal spending.
Including funders among those covered by attorney-client confidentiality.
Disallowing lawyers from seeking or having a financial interest in funding provided to clients by third-parties.
Necessitating attorneys be informed of funding contracts, and for lawyers to affirm that they were informed.
Several states have adopted ARC-approved legislation that increases protections for those who use Consumer Legal Funding.
Ohio
Nebraska
Main
Vermont
Oklahoma
These common-sense provisions are designed to improve transparency and enable clients to make informed decisions about whether or not to accept third-party funding as their case progresses. As Eric Schuller, President of ARC, noted: “Having a clear statute in place lets everyone know what they can and cannot do, and thereby removes any ambiguities that are associated with the product and industry.” Schuller also added, “To our knowledge, in the states that have passed reasonable regulations on the industry, there has not been a single complaint or issue since the statute has been in place.” Looking Ahead An academic study of CLF funder LawCash delivered some vital findings. First, the study found that the funder declined to fund roughly half the cases it was approached with. Defaults on awards or settlements cost the funder about 12% of its due revenue. Even profitable cases fell short of expectations—stemming from both client defaults and alternate arrangements made with clients. The study did not confirm or disprove an overall societal benefit to third-party legal funding. It did demonstrate that increased transparency and simplifying funding contracts carry benefits to consumers, as does regulation requiring lawyers to be more proactive in protecting clients. Ultimately, Consumer Legal Funding is a necessary, even essential part of leveling the playing field of our legal system. Regulation is increasingly becoming a tool leveraged by insurers to limit the amount of recourse available to those who have been injured, cheated, or otherwise wronged by larger entities. Let’s hope that more moderate minds prevail, and that CLF continues to ramp up consumer protections, while advancing access to justice.
When people talk about third party litigation financing, they often lump everything into one bucket—as if every type of funding that touches the legal system is essentially the same. But that’s a misconception. The world of legal finance is much more varied, and each type serves a distinct role for a distinct audience.
A good way to understand the differences is to step away from the courtroom and into the world of music. Think of Consumer Legal Funding as a rock band, Commercial Litigation Financing as a symphony orchestra, and Attorney Portfolio Financing as a gospel choir.
All three make music—they all provide funding connected to the legal system—but they produce very different sounds, are organized differently, and serve different purposes. Let’s explore these three “musical groups” of legal funding to understand how they work, why they exist, and what separates them.
Consumer Legal Funding: The Rock Band
Immediate, Personal, and Audience-Driven
A rock band connects directly with its fans. The music is raw, emotional, and often tied to the lived experiences of ordinary people. That’s exactly what Consumer Legal Funding does—it provides individuals with direct financial support while they are waiting for their personal injury cases to resolve.
Most people who seek consumer legal funding have been in a car accident, or experienced some other harm caused by negligence. While their cases work their way through the legal system, they still need to pay rent, buy groceries, keep the lights on, and support their families. Consumer Legal Funding steps in to help them cover these day-to-day expenses.
Like a rock band that thrives on the energy of a crowd, Consumer Legal Funding is closely tied to the needs of everyday people. It’s not about abstract legal theories or corporate strategy. It’s about giving real people financial breathing room so they can withstand the pressure from insurers who might otherwise push them to settle for less than they deserve.
Flexibility and Accessibility
Just as a rock band doesn’t require a massive concert hall or multimillion-dollar backing, Consumer Legal Funding is accessible on a small, personal scale. A consumer can request a few hundred or a few thousand dollars to cover immediate needs, and repayment is contingent on the case outcome. If the plaintiff loses, they owe nothing.
This non-recourse structure mirrors the risk of a rock band going on tour—they might make money, or they might not, but the fans are there for the experience. Similarly, Consumer Legal Funding companies take the risk that the case might not succeed, and they may not get their investment back.
Critics and Misconceptions
Rock bands often face criticism for being too loud, too disruptive, or too unconventional compared to “serious” classical music. Consumer Legal Funding gets similar pushback. Critics sometimes argue it encourages frivolous lawsuits or drives up settlement costs. But the reality is the opposite—the funds provided to a consumer doesn’t fund lawsuits; they fund life necessities for individuals already in the legal system.
Consumer Legal Funding’s role is narrow but vital. Like a rock band giving a voice to ordinary people, it empowers individuals who might otherwise be silenced by financial hardship.
Commercial Litigation Financing: The Symphony Orchestra
Complex, Structured, and High-Stakes
Where Consumer Legal Funding is the rock band of the legal funding world, Commercial Litigation Financing is the full symphony orchestra—large, complex, and meticulously coordinated.
Here, the players are not individuals injured in accidents but corporations, investors, and law firms involved in high-value commercial disputes. These cases can involve intellectual property battles, antitrust issues, international contract disputes, or shareholder actions. The stakes often run into the tens or hundreds of millions of dollars.
Like an orchestra, Commercial Litigation Financing is structured and multi-layered. Each section—strings, brass, woodwinds, percussion—must work together under the baton of a conductor. In litigation finance, this “conductor” is the funding company, aligning investors, lawyers, and plaintiffs toward a common goal: seeing the case through to resolution.
Strategic and Long-Term
Orchestras don’t play three-minute songs; they perform long symphonies that require endurance, precision, and careful planning. Similarly, Commercial Litigation Financing is not about immediate cash flow. It’s about supporting a complex legal strategy over years of litigation.
Funds can cover attorney fees, expert witnesses, discovery costs, and even corporate operations while a case drags on. The financing enables companies to pursue claims they might otherwise abandon because of the sheer cost and duration of litigation.
Audience and Impact
The audience for an orchestra is often more formal, more elite, and more willing to pay for a grand performance. Commercial Litigation Financing likewise serves a specialized, high-stakes audience: multinational corporations, hedge funds, and sophisticated investors. The outcomes affect entire industries and markets, not just individual households.
While a rock band might play in bars or stadiums, an orchestra plays in concert halls before an audience expecting refinement. That’s the difference in scale between Consumer Legal Funding and Commercial Litigation Financing.
Attorney Portfolio Financing: The Gospel Choir
Collective Strength and Community
If Consumer Legal Funding is a rock band and Commercial Litigation Financing is a symphony orchestra, then Attorney Portfolio Financing is a gospel choir. It’s powerful, collective, and rooted in the idea of strength in numbers.
Attorney Portfolio Financing provides capital to law firms by pooling together multiple cases—often personal injury or contingency fee cases—into one financing arrangement. Instead of betting on a single case, the funding spreads across a portfolio, much like the voices of a choir blend to create a unified sound.
Stability and Predictability
A gospel choir doesn’t rely on one soloist to carry the performance. If one voice falters, the rest keep singing. Similarly, portfolio financing reduces risk because the outcome of any one case doesn’t determine the success of the financing. The strength lies in the collective performance of many cases.
This allows law firms to take on more clients, expand their practices, and better withstand the financial ups and downs of litigation. For clients, it means their attorneys have the resources to see their cases through rather than being pressured into quick settlements.
Purpose and Spirit
Gospel choirs aren’t just about music—they’re about inspiration, resilience, and community. Attorney Portfolio Financing carries a similar spirit. It’s designed not only to provide financial stability for law firms but also to empower them to serve clients more effectively.
While the audience for a gospel choir is often the community itself, the “audience” for portfolio financing is law firms and, indirectly, the clients who benefit from better-resourced representation.
Comparing the Three Sounds
To appreciate the differences, let’s put the three side by side:
Type of Funding
Musical Analogy
Audience
Scale
Purpose
Consumer Legal Funding
Rock Band
Individuals waiting for case resolution
Small-scale, personal
Helps consumers cover living expenses while awaiting settlement
Commercial Litigation Financing
Symphony Orchestra
Corporations, investors, large law firms
Large-scale, complex
Funds high-stakes commercial disputes over years
Attorney Portfolio Financing
Gospel Choir
Law firms (and indirectly their clients)
Medium-to-large scale
Provides stability by funding multiple cases at once
Why These Distinctions Matter
Understanding these distinctions isn’t just an academic exercise—it has real implications for policy, regulation, and public perception. Too often, critics conflate Consumer Legal Funding with Commercial Litigation Financing or assume Attorney Portfolio Financing operates the same way as individual case advances.
But regulating a rock band as if it were an orchestra—or treating a gospel choir as if it were a solo act—would miss the point entirely. Each type of legal funding has its own purpose, structure, and audience.
Consumer Legal Funding keeps people afloat in times of crisis.
Commercial Litigation Financing enables corporations to fight complex battles on equal footing.
Attorney Portfolio Financing stabilizes law firms and expands access to justice.
All three are part of the broader “music” of legal finance, but they are distinct genres with distinct contributions.
Conclusion: Harmony Through Diversity
Music would be dull if every performance sounded the same. The same is true for legal finance. A rock band, a symphony orchestra, and a gospel choir all create music, but their sounds, audiences, and purposes differ dramatically.
Similarly, Consumer Legal Funding, Commercial Litigation Financing, and Attorney Portfolio Financing are all forms of legal finance, but each plays a unique role. Recognizing these differences is crucial for policymakers, industry professionals, and the public.
When we appreciate the rock band, the orchestra, and the choir for what they are, we begin to see the full richness of the legal finance “soundtrack.” Together, they form a diverse ecosystem that, when balanced correctly, ensures both individuals and institutions can pursue justice without being silenced by financial pressure.
Express Legal Funding announced it has reached its fifth year as a member of the Alliance for Responsible Consumer Legal Funding (ARC), underscoring a commitment to best practices in an often-polarized pre-settlement space. For a company that brands itself around transparent pricing and consumer education, the ARC imprimatur doubles as a marketing and compliance asset—especially as statehouses revisit disclosure, APR caps and contract clarity.
An announcement in PR Newswire positions the milestone within a “rapidly growing” lawsuit-cash-advance market. While the release is light on metrics, the message tracks with the broader U.S. consumer-funding narrative: pressure from insurers and tort-reform groups on one side; advocates and funders emphasizing access to liquidity and non-recourse safety on the other.
For plaintiff firms, vendor due diligence remains a reputational imperative; for consumers, independent accreditation—however voluntary—can serve as a quick proxy for baseline standards when shopping funding offers. The strategic subtext is clear: as more states contemplate rules around discoverability, disclosures and rate structures, firms that can point to consistent adherence to codes like ARC’s may enjoy smoother law-firm relationships and fewer regulatory headwinds.
With regulatory skirmishes likely to continue at the state level, recurring membership signals (ARC or otherwise) will matter more.
Editor's Note: An earlier version of this article stated that Express Legal Funding reached its fifth consecutive year as a member of the Alliance for Responsible Consumer Legal Funding. Express Legal Funding reached its fifth year, but not consecutively. We regret the error.
High Rise Financial has added industry veteran Karyn Cerulli as Regional Vice President of Sales, deepening the Los-Angeles-based funder’s reach into the personal-injury bar. Cerulli spent more than a decade with FindLaw and Thomson Reuters, where she partnered with firms on digital marketing and business-development strategies. In her new role she pivots from lead generation to liquidity, positioning High Rise’s non-recourse advances as a client-care tool for plaintiffs’ firms facing lengthy litigation timelines.
A post on LinkedIn sets out Cerulli’s agenda: hands-on attorney support, a “best rate guarantee,” and white-glove service that places “zero pressure” on case strategy while delivering cash within days. Cerulli frames High Rise as a complement rather than a competitor to existing funders, inviting firms to keep her on standby as a “second option” or safety net when primary partners stall or pricing shifts.
The move comes amid rapid growth for High Rise, which secured a $100 million senior credit facility late last year to expand its pre-settlement portfolio and medical-lien program. The funder touts 24-hour approvals, no credit checks, and repayment only from a successful resolution—features that resonate with Cerulli’s long-time focus on consumer-friendly legal services. With her network of plaintiff-side marketers and case managers, the company hopes to accelerate origination across high-volume auto and premises claims.
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