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Understanding Pre-Settlement Funding: A Resource for Plaintiffs Facing Long Legal Battles

By Harry Moran |
February 25, 2025

Understanding Pre-Settlement Funding: A Resource for Plaintiffs Facing Long Legal Battles

Rockpoint Legal Funding has released a new educational overview on the role of pre-settlement funding for individuals involved in personal injury and other civil lawsuits. As court dockets swell and case timelines extend, plaintiffs often encounter mounting financial pressures that can influence their legal decisions. This overview examines the mechanics of pre-settlement funding, the considerations for deciding whether it is an appropriate option, and the broader context of litigation finance in the United States.

Pre-settlement funding—also known as legal funding or lawsuit advances—is a financial arrangement in which a provider offers immediate funds to plaintiffs who have an active legal claim. The advance is typically “non-recourse,” which means that the plaintiff is only obligated to repay if the underlying case results in a monetary settlement or award. This structure aims to relieve short-term economic stress, such as covering medical bills or everyday living costs, without imposing the risk of personal liability if the case does not succeed.

Why Litigation Timelines Can Be Lengthy

In many jurisdictions, personal injury and other civil claims progress through multiple stages. The initial filing, discovery period, settlement negotiations, and potential trial can each introduce procedural delays. Moreover, defense counsel or insurance companies may seek extensions or engage in protracted negotiations, especially if the case is complex or involves substantial damages. These drawn-out timelines can place significant strain on plaintiffs who are juggling medical appointments, lost wages, or other unexpected expenses stemming from the incident in question.

How Non-Recourse Funding Operates

Non-recourse funding arrangements differ from traditional loans in two key ways. First, plaintiffs do not make monthly payments during the lawsuit’s duration. Second, if the case concludes without a settlement or court award, the plaintiff typically owes nothing. However, if there is a successful outcome, the provider recovers its advance from the proceeds, plus any agreed-upon fees or charges. Because repayment depends on the lawsuit’s success, funding companies evaluate the viability of a claim by reviewing documentation such as medical records, police reports, and legal filings. This vetting process helps determine both eligibility and the potential amount of funding offered.

Considerations for Plaintiffs

While pre-settlement funding can offer financial breathing room, it is not a universal solution for every litigant. Plaintiffs are advised to consult closely with their attorneys before deciding to move forward with an advance. An attorney can provide guidance on whether anticipated settlement amounts reasonably justify the costs associated with funding. Additionally, plaintiffs should take time to review any contract terms carefully, paying particular attention to fee structures and potential caps on interest. Regulatory requirements for transparency vary from state to state, and consumer protection advocates often encourage individuals to ask prospective funders for itemized disclosures that outline how expenses and interest accumulate over time.

Balancing Immediate Needs with Long-Term Outcomes

For many plaintiffs, the main appeal of pre-settlement funding lies in the ability to cover urgent expenses without feeling pressured to accept a premature or undervalued settlement. Financial stress can sometimes overshadow the pursuit of a fair legal resolution. Having access to funds to pay rent, medical bills, and utility costs can enable individuals to focus more effectively on recovering from injuries and collaborating with their legal teams. At the same time, the additional fees tied to funding must be weighed against the potential difference a plaintiff might receive if they negotiate a higher settlement by waiting. Striking a balance between meeting immediate needs and preserving future gains is a critical part of the decision-making process.

Regulatory Landscape and Industry Best Practices

The legal funding industry is subject to varying degrees of oversight. Several states have enacted or proposed regulations to ensure consumer protections. In some jurisdictions, legislators have mandated clear and conspicuous disclosures regarding interest rates, fee schedules, and any other costs that might be included in the repayment obligation. These efforts aim to safeguard plaintiffs from overextending themselves financially or unknowingly entering into agreements with unfavorable terms. Reputable legal funding companies generally support transparent industry standards, seeing them as essential for maintaining trust and helping plaintiffs fully understand the implications of the agreements they sign.

Potential Impact on the Legal Process

Plaintiffs considering pre-settlement funding often wonder whether accessing an advance will change how negotiations proceed. While the presence of funding does not directly alter the defendant’s or insurance company’s approach, plaintiffs who relieve their short-term financial hardships may feel less pressure to settle immediately. This dynamic can sometimes allow parties to conduct more thorough investigations, secure additional expert opinions, or wait for crucial evidence to come to light. Nonetheless, case outcomes depend on numerous factors—including liability assessments, the strength of the evidence, and judicial proceedings—and not solely on whether the plaintiff has opted for a funding advance.

Addressing Myths and Misconceptions

Despite growing awareness, misconceptions about lawsuit funding persist. One common myth is that plaintiffs give up control of their case when they secure an advance. In practice, a reputable funding provider does not direct case strategy or negotiations; plaintiffs and their attorneys maintain full authority over legal decisions. Another misconception is that high rates inevitably accompany all pre-settlement advances. While some companies may impose significant fees, others strive for more balanced terms. Conducting comparative research and consulting third-party resources can help plaintiffs identify funding options that align with their specific needs.

Informing Plaintiffs and Attorneys

Through its resource materials and ongoing educational initiatives, Rockpoint Legal Funding aims to clarify how pre-settlement advances fit into the broader legal landscape. Attorneys can benefit by understanding the various funding options available to clients, enabling them to offer well-rounded advice. Meanwhile, plaintiffs gain insight into navigating what can be a confusing world of financial products and services. Informed decision-making involves not only estimating the value of a legal claim but also realistically appraising personal financial requirements and the time it may take to resolve a case.

About Rockpoint Legal Funding

Rockpoint Legal Funding provides non-recourse cash advances to plaintiffs in personal injury and other civil cases. The company’s primary goal is to help individuals facing extended litigation address pressing financial concerns so they can pursue a fair legal outcome. Through transparent practices, Rockpoint endeavors to equip both plaintiffs and their attorneys with clear information, enabling them to decide whether a funding advance is appropriate for their circumstances.

For more information about Rockpoint Legal Funding, visit rockpointlegalfunding.com.

About the author

Harry Moran

Harry Moran

Consumer

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Consumer

ARC Releases New Consumer Survey: Three Years Apart, Consumers Tell the Same Story

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

The Numbers Haven't Changed, and That's the Story. Three Years Apart, Consumers Report the Same Financial Need and the Same Value in Consumer Legal Funding.

The Alliance for Responsible Consumer Legal Funding (ARC) has released its 2026 Consumer Survey, providing a new look at how consumers use Consumer Legal Funding and why access to the funds remains important while legal claims are pending.

Hundreds of consumers from across the country reported turning to the product for help paying rent or a mortgage, utilities, food, transportation, and other essential household expenses that cannot wait for the legal system to run its course.

ARC's second major consumer survey in three years reinforces the findings from 2023. Across both surveys, consumers describe a real need for funds to support everyday life, and more than nine out of ten say they would use Consumer Legal Funding again if needed.

The Need Has Remained Remarkably Consistent

Consumer Legal Funding is sometimes confused with financing the costs of litigation. The survey data tells a very different story.

Consumers reported needing financial assistance for the ordinary expenses of everyday life while waiting for their legal claims to be resolved. Housing, utilities, food, transportation, and other household obligations do not stop because someone has been injured or has a pending legal claim.

Perhaps the most striking finding from the comparison involves housing.

In 2023, 73.00% of respondents reported difficulty paying their rent or mortgage. In 2026, the number was 73.03%.

That consistency is significant. Two separate groups of consumers, three years apart, identified essentially the exact same financial pressure as the leading reason they needed assistance.

The same pattern appears with other basic necessities. Difficulty paying utilities increased from 58.35% in 2023 to 61.30% in 2026, while difficulty paying for food increased from 54.00% to 60.07%.

These consumers are not describing litigation expenses. They are describing household expenses.

They are trying to keep a roof over their heads, keep the lights on, put food on the table, make car payments, and maintain financial stability while their legal claims move through the system.

That is the real-world function of Consumer Legal Funding: Funding Lives, Not Litigation.

An Accident Can Create an Immediate Financial Crisis

The circumstances surrounding the need for funding are equally important.

In 2023, 70.64% of respondents were not employed when they received Consumer Legal Funding. In 2026, that number was 72.08%. Even more telling, the percentage reporting that their lack of employment resulted from the circumstances creating their need for funding, such as a car accident, increased from 58.94% in 2023 to 65.72% in 2026. Personal injury and automobile claims remained the dominant claim type, representing 76.83% of respondents in 2023 and 78.45% in 2026.

"Since my injury, I've had to retire from work. My funding company has checked in while waiting on my settlement to see if I need additional help through the process. This has been positive for me."

The practical sequence is easy to understand.

A consumer is injured. That injury may interfere with the person's ability to work. Household bills continue arriving. Meanwhile, the legal claim may take months or longer to resolve.

The legal system operates on one timeline. A family's financial obligations operate on another.

Consumer Legal Funding can help bridge that gap by providing financial resources while ordinary household expenses continue and the consumer's legal claim remains unresolved.

"I received money early in the process when I was very stressed, in a lot of pain, and overwhelmed because of my head injury. They made it easy for me to understand and receive."

That distinction is essential to understanding the product. Consumer Legal Funding is not about paying attorneys' fees, experts, discovery costs, or other litigation expenses. The surveys repeatedly identify rent or mortgage payments, utilities, food, transportation, and other household obligations as the financial pressures consumers are facing.

For Many Consumers, There Are Few Alternatives

One of the clearest findings from the ARC surveys is that many consumers appear to have very limited financial alternatives when they turn to Consumer Legal Funding.

In 2023, 39.13% of respondents selected "None" when asked which listed financial alternatives they had used before obtaining Consumer Legal Funding. By 2026, that number had increased to 43.19%. Reliance on family and friends was also significant, although it declined from 38.22% in 2023 to 34.51% in 2026. By comparison, credit cards were used by 19.68% of respondents in 2023 and 21.42% in 2026, while personal loans were used by only 11.90% and 13.45%, respectively.

Taken together, these findings paint an important picture. For a substantial number of consumers, Consumer Legal Funding is not simply one financial option among many. More than four in ten respondents in the 2026 survey reported using none of the listed alternatives before turning to Consumer Legal Funding, while many others had relied on family or friends rather than traditional financial products.

That makes access to Consumer Legal Funding particularly important. When someone has been injured, is unable to work, and is struggling to pay rent, utilities, food, or transportation expenses, there may be very few realistic places to turn for financial assistance while a legal claim remains pending.

"Thank you for helping me when everyone else turned me away."

This is an important consideration for policymakers. Restrictions that significantly reduce access to Consumer Legal Funding do not create new financial alternatives for these consumers. They simply risk removing an option that many consumers are using at a time when their other choices appear limited.

The underlying financial need remains. The question is whether consumers will continue to have access to a product that can help them meet that need while they wait for their legal claim to be resolved.

Consumers Continue to Say They Would Use It Again

Perhaps the clearest measure of consumer satisfaction and the value consumers place on the product is what they say they would do if faced with the same need again.

The results are significant not simply because they are high, but because they are remarkably consistent.

In 2023, 91.08% of respondents said they would use Consumer Legal Funding again if needed.

Three years later, 90.70% said the same thing.

That is a difference of only 0.38 percentage points between two separate surveys. Recommendation rates were similarly strong, with 89.43% in 2023 and 87.35% in 2026 saying they would recommend their funding company.

Those numbers deserve a prominent place in the public discussion about Consumer Legal Funding.

A single survey showing that more than nine out of ten consumers would use the product again would be noteworthy. Two separate surveys, conducted three years apart among different groups of consumers, producing virtually identical results, are even more compelling.

91.08% in 2023. 90.70% in 2026.

More than nine out of ten consumers in both surveys said they would choose Consumer Legal Funding again if they needed it.

And nearly nine out of ten in both surveys said they would recommend their funding company.

These are not opinions from people observing the product from the outside. These are responses from consumers who actually used Consumer Legal Funding during a period of financial need.

"The process was easy, and the money was helpful. I would recommend this company to everyone who is in a situation like mine."

Their experiences deserve to be part of the policy discussion.

Hundreds of Consumers Across the Country Are Telling a Consistent Story

The strength of the ARC surveys is not based on a single percentage or a single group of respondents.

Hundreds of consumers participated in each survey, with respondents coming from across the country.

About 73% in both surveys struggled with rent or mortgage payments. Basic household necessities remained the dominant reason consumers needed financial assistance. A substantial percentage reported using none of the listed financial alternatives before obtaining Consumer Legal Funding. And more than 90% in both surveys said they would use the product again if needed.

That is not simply one survey producing a favorable statistic. It is a repeated consumer story.

Two Surveys, One Clear Message

One survey provides a snapshot. Two surveys conducted three years apart provide something more meaningful: the ability to determine whether the same basic patterns appear again.

ARC's 2023 and 2026 surveys independently tell essentially the same story. Consumers experience accidents, injuries, or other events that can disrupt employment. Their household expenses continue while their legal claims remain unresolved. Housing is consistently the leading financial pressure, with utilities and food also affecting significant majorities of respondents.

And after experiencing Consumer Legal Funding firsthand, more than 90% in both surveys said they would use it again if they needed it.

That repeated consumer response should matter to policymakers.

Consumer Legal Funding should be responsibly regulated, and strong consumer protections and meaningful industry standards are entirely compatible with preserving access. But regulation should begin with an understanding of why consumers need the product and what consumers themselves say about its value.

When policymakers consider laws or regulations that could significantly restrict Consumer Legal Funding, they should also consider what happens to the consumer afterward.

The accident has not disappeared. The pending legal claim has not suddenly been resolved. The rent has not gone away. Neither have the utility bill, grocery bill, car payment, or other everyday household obligations.

The most important voices in this debate should include the people who have actually faced that difficult period and used the product.

Across two surveys, three years, and hundreds of consumers from across the country, the message is remarkably consistent:

The need is real. The product serves an important purpose. And overwhelmingly, consumers say they would use it again.

A version of this commentary first appeared in The National Law Review.

Consumer

ARC’s Schuller Argues Consumer Legal Funding Safeguards Have Become a Bipartisan Settlement

The president of the Alliance for Responsible Consumer Legal Funding has argued that consumer protection and access to legal funding are not competing goals, pointing to near-identical safeguards enacted in states at opposite ends of the political spectrum.

Writing in the National Law Review, Eric Schuller compares the frameworks adopted in Kansas, Utah, California and New York and finds the same core provisions recurring regardless of which party controls the legislature. The starting point is the product itself: consumer legal funding is non-recourse, so repayment depends solely on the proceeds of the claim and a consumer who recovers nothing owes nothing.

From there, the statutes converge on disclosure. Kansas HB 2518 requires agreements to use "common, everyday language" and to state all charges and the maximum amount the consumer could owe; New York requires "common, understandable language" alongside a repayment schedule. Cancellation rights follow a similar pattern, with Kansas and New York providing ten business days, Utah HB 280 extending its window from five days to ten, and California allowing five business days to rescind.

Each state also builds in the claimant's attorney. Kansas requires an attorney acknowledgment confirming the disclosures were reviewed and that no referral fee was paid, without which the contract is null and void. All four bar funding companies from influencing the conduct, settlement or resolution of the claim, leaving those decisions with the consumer and counsel.

On enforcement, Kansas permits penalties of up to $10,000 per willful violation, California provides statutory damages and attorney's fees, and New York allows a company to forfeit its right to recovery.

Consumer

New York Times Investigation Examines Securitization of Consumer Legal Funding Advances

A New York Times investigation published Wednesday reports that some of the largest consumer legal funding companies are bundling cash advances made to personal injury plaintiffs into asset-backed securities sold to investors, and examines how that financing cycle interacts with a sharp rise in personal injury litigation.

As reported by The New York Times, reporters Ellen Gabler, Robert Gebeloff and Julie Tate identified six major funders that securitize their advances, accounting for more than 90% of advances nationwide according to industry trade group figures. The Times found more than two dozen securitization deals since 2020, representing hundreds of thousands of cases and raising $2.8 billion from investors. Advances carry fees and interest averaging 35% to 45% a year, and in one cited example a New York plaintiff who received $76,500 in advances owed at least $1.4 million by the time her case settled.

The article situates this alongside a 70% increase in personal injury filings in state courts over the past decade, and notes that since 2023 companies including Geico, Allstate, Uber and FedEx have brought at least 60 civil racketeering suits accusing lawyers and medical providers of inflating claims. Funders quoted in the piece dispute that fraud is widespread, with the American Legal Finance Association's Jack Kelly arguing that cutting off securitization would cut off the supply of money to victims. The Times also reports that more than a dozen states have restricted third-party litigation funding, with West Virginia the first to explicitly limit securitization.

The Alliance for Responsible Consumer Legal Funding responded to the report by calling for regulation rather than restriction.

"Some of the conduct described in The New York Times article is exactly the type of conduct responsible regulation should prevent," said Eric Schuller, President of the Alliance for Responsible Consumer Legal Funding. "New York has now put strong protections in place that directly address many of these concerns, while states such as Kansas have adopted similarly comprehensive regulatory frameworks. The answer is not to take Consumer Legal Funding away from injured consumers who need help paying their rent, mortgage, utilities or putting food on the table while their case moves through the legal system. The answer is to establish clear rules, enforce those rules and hold anyone who violates them accountable. Responsible regulation protects consumers while preserving access to Consumer Legal Funding for the people who truly need it."