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Probate Funding: A Useful Option for So Many (Part 4 of 4)

Probate Funding: A Useful Option for So Many (Part 4 of 4)

The following is Part 4 of our 4-Part series on Probate Funding by Steven D. Schroeder, Esq., General Counsel/Sr. Vice President at Inheritance Funding Company, Inc. since 2004. Parts 1, 2 & 3 can be found here, here and here. What are the Risks in Probate Funding? Similar to California Probate Code 11604, (formerly Cal. Probate Code 1021.1), the Legislature, in enacting Probate Code 11604.5, has specifically indicated that Assignments relative to Probate Advances will not be set aside unless it is clear that the consideration paid is “grossly unreasonable”, at the time the transaction was executed. In fact, the Probate Court can presume the validity of an Assignment, in the absence of any objection raised or evidence submitted to the contrary. See Lynch v. Cox. (1978) 83 Cal. App. 3rd 296, 147 Cal. Rptr. 861. However, nothing in the Probate Code Sections 11604 or 11604.5 indicates a legislative intent to modify the law concerning the evaluation date to be utilized in appraising the fairness of a contract. In interpreting statutes, courts are required to do so in a manner which will produce a reasonable and not an absurd result. See Freedland v. Greco (1955) 45 Cal. 2d 462, 289 P.2d 463. Thus, in the absence of any evidence that the consideration received by the Assignor was grossly unreasonable, at the time received, the Assignee should be presumed to have had the benefit of all the protection the law provides. See Boyd v. Baker (1979) 98 Cal. App. 3rd 125, 159 Cal. Rptr. 298, 304. Moreover, given that the Probate Funding Company has no assurance of recovery at the time the Assignment is executed, nor any recourse against the Assignor/Heir, it is imperative that the Court consider the many risks a Probate Advance Company assumes during administration.    The following are just a few examples of those risks: *Mismanagement or conversion of Estate funds by the Personal Representative; *Unanticipated claims, such as Medical, Medicaid, Uninsured Medical Hospital or Nursing Bills; *Litigation, including but not limited to Will Contests, Property Disputes, Reimbursement Claims; *Inaction or Delays by the Personal Representative and/or Probate Attorney; *Previously unknown will discovered, disinheriting the Assignor; *Spousal/Domestic Partner Support Claims; *Tax Liability/Litigation; *Partnership Dissolution; *Foreclosure of Estate property; *Child Support Liens; *Unusually high extraordinary personal representative and/or Attorney Fee Claims; *Devaluation of Real Estate Market (i.e. 2008); *Bankruptcy by an heir; *Litigation against the heir. Alienation:  An Heir’s Right. Clearly, the Probate court has the jurisdiction to review an Assignment under Probate Code §11604.5 and consider whether the consideration paid was “grossly unreasonable” at the time it was executed. See Estate of Wright (2001) 90 Cal. App.4th 228, 108 Cal. Rptr. 2d 572.  Yet, it must be remembered that an heir’s right to alienate his/her interest is an important one and should not be infringed upon in a random or desultory manner. See Gold, et. Cal Civil Practice: Probate and Trust Proceedings (2005) §3:86, p. 3-78. Conditions restraining alienation, when repugnant to the interest created are void. See California Civil Code §711. In this vein, Courts should also consider the fact that the lion’s share of heirs who have obtained probate advances have done so out of their own free will, without solicitation and/or direct marketing.[1] Many heirs who research probate advances find that it is a preferred option to loans or other sources of funding, which take substantial time to qualify, require credit checks and extensive documentation and create personal obligations. Therefore, as long as terms of the Assignment are simple, straightforward and unambiguous – and it appears on its face that the Heir was given full disclosure and consented to the transaction – Courts should be hesitant to interfere with the Heirs’ right of alienations. Conclusion It is intellectually dishonest to ignore the obvious legal distinctions between Probate Assignments and Loans. Probate Funding Companies like IFC provide a valuable option for many heirs who would not be able to qualify for a traditional loan and/or do not wish to personally obligate themselves. Probate Funding Companies assume a myriad of risks while administration is pending with no guaranty of absolute repayment. In California, the Legislature has enacted Probate Code Section 11604.5 which governs the transfer of a beneficial interest in the form of an Assignment, and clearly distinguishes these transactions from loans. Further, that section affords the Probate Court all the authority it needs to review Assignments and determine whether, at the time the Assignment was given, the consideration paid was grossly unreasonable. In reviewing its terms, Courts must always consider an Heir’s inherent right of alienability. If fair disclosure was given by the Probate Advance Company, and it is found that the heir understood and consented to the Assignment, the Court should be very cautious in modifying the terms of an Assignment, ex post facto. In part 1 of this series, we cited just one case of many which demonstrates why Probate Funding is a useful option for so many heirs, and a far better option than a recourse loan.  In that case, Ms. Tanner would have likely lost her house to foreclosure if it was not for the availability of the Probate Advance provided by IFC. In hindsight, Helen Tanner made a very good deal for herself – even if she had the ability to qualify for a loan, the cost to her over such a protracted period would have been significantly greater. On the other hand, the return for IFC, some nine (9) years later, was considerably less than ideal. That being said, the end-result in Tanner was far better for IFC than in the numerous other Estates in which it has incurred significant losses through the years. Heirs/beneficiaries are fortunate that there are Companies willing to take risk and pay heirs a sum of money for a fixed Assignment during Probate administration with zero personal recourse against the heir. Steven D. Schroeder has been General Counsel/Sr. Vice President at Inheritance Funding Company, Inc. since 2004. Active Attorney in good standing, licensed to practice before all Courts in the State of California since 1985 and a Registered Attorney with the U.S. Patent and Trademark Office. [1] Over 90% of heirs seek funding through IFC’s website, by other heirs who have already contracted with IFC, by lawyers or personal representatives.
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Three Sounds, Three Purposes: Understanding Consumer Legal Funding, Commercial Litigation Financing, and Attorney Portfolio Financing

By Eric Schuller |

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

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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 FundingMusical AnalogyAudienceScalePurpose
Consumer Legal FundingRock BandIndividuals waiting for case resolutionSmall-scale, personalHelps consumers cover living expenses while awaiting settlement
Commercial Litigation FinancingSymphony OrchestraCorporations, investors, large law firmsLarge-scale, complexFunds high-stakes commercial disputes over years
Attorney Portfolio FinancingGospel ChoirLaw firms (and indirectly their clients)Medium-to-large scaleProvides 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 Re-Ups Ethics Signal With ARC Membership

By John Freund |

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.

Karyn Cerulli Joins High Rise Financial to Bolster PI Funding

By John Freund |

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.