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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

Equal Justice Under the Law: Why Access to Justice Must Include the Ability to Wait for Justice

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

As the United States Supreme Court begins a new term, the words carved above the entrance to the Supreme Court Building deserve renewed attention: “Equal Justice Under Law.”

Those four words have greeted generations of Americans approaching the nation’s highest court. But the circumstances surrounding their placement on the Supreme Court Building make them particularly meaningful today.

The phrase was selected for the new Supreme Court Building in 1932, at a time when the United States was in the depths of the Great Depression. Millions of Americans were confronting unemployment, lost savings, financial insecurity, and uncertainty about their futures.

Against that backdrop, the nation chose to place a simple but powerful promise above the entrance to its highest court: Equal Justice Under Law.

Nearly a century later, that principle remains just as important.

Justice should not depend on wealth, influence, or a person's ability to withstand the financial pressures that can accompany a legal claim. Yet for many Americans, access to the courthouse is only part of the challenge. They also need the financial ability to remain there long enough for the legal process to work.

For an injured consumer pursuing a legitimate legal claim, a case can take months or even years to resolve. During that time, everyday financial obligations do not stop. Rent and mortgage payments still come due. Utilities must be paid. Families need food. Cars need gas, and medical and other household expenses continue.

That financial pressure can have a very real effect on access to justice.

The Economic Side of Access to Justice

When we discuss access to justice, the conversation often focuses on access to attorneys and courts. Those are essential, but there is another component that receives far less attention:

Can an individual afford to wait for a fair resolution of a claim?

A well-funded defendant or insurance company may have the financial resources to withstand a lengthy legal process. An individual consumer often does not.

That imbalance matters.

A person facing mounting household expenses may feel compelled to accept a settlement earlier than he or she otherwise would, not because the settlement represents the appropriate value of the claim, but because the electric bill, rent payment, or grocery bill cannot wait.

Consumer Legal Funding can help address that imbalance.

Consumer Legal Funding provides consumers with funds for personal and household needs while a legal claim is pending. It does not finance the litigation itself. The funds are not provided to pay attorneys, expert witnesses, court costs, or other expenses associated with prosecuting the case.

Instead, the money helps consumers meet the ordinary costs of living while their attorneys handle their legal claims.

Importantly, Consumer Legal Funding is non-recourse. Repayment depends upon the consumer obtaining a recovery from the legal claim. If there is no recovery, the consumer does not repay the funding.

Justice Should Not Have a Financial Clock

The principle of “Equal Justice Under Law” does not mean that every litigant will receive the same outcome. Nor should it.

It means that our system should provide a fair opportunity for claims and defenses to be considered on their merits.

Financial hardship should not become an unofficial clock running against an injured consumer.

Imagine two individuals with equally valid claims. One has enough savings to support a family for two years while the case proceeds. The other lives paycheck to paycheck and, because of an injury, may be unable to work at full capacity.

Both individuals technically have access to the same courts. Both may have competent attorneys. Both are protected by the same laws.

But their practical ability to pursue justice can be very different.

If one can afford to wait while the other must accept an early settlement simply to keep a roof over the family's head, we should recognize that economic circumstances have affected their ability to allow the legal process to work.

Consumer Legal Funding cannot solve every financial challenge confronting an injured consumer. But for consumers who choose it, funding can provide something extraordinarily important: Time.

Time to allow their attorneys to do their jobs.

Time for the facts to be developed.

Time for negotiations to proceed.

And time to make decisions about a legal claim based upon the merits of the case rather than the immediate pressure of household bills.

Protecting Consumers While Preserving Choice

Responsible regulation has an important role to play.

Consumers should receive clear contracts and disclosures. They should understand the cost of a funding transaction. Attorneys should acknowledge that their clients have entered into these agreements. Funding companies should never control litigation strategy, direct attorneys, or interfere with settlement decisions.

Those protections strengthen the marketplace.

But regulation should protect consumer choice, not eliminate it.

Policies that make Consumer Legal Funding unavailable or economically impractical do not eliminate the financial hardship that caused a consumer to seek funding in the first place.

The rent is still due.

The utility company still expects payment.

Groceries still have to be purchased.

Removing an option is not the same as removing the need.

A Promise That Still Matters

There is something especially significant about the fact that “Equal Justice Under Law” was placed on the Supreme Court Building during one of the most economically difficult periods in American history.

In 1932, financial hardship was not an abstract concept. It was a reality confronting millions of American families.

Yet at precisely that moment, as the country struggled through an extraordinary financial crisis, those words were chosen for the entrance to an institution intended to represent the rule of law and equal justice.

That history should remind us of something important today.

Economic hardship and access to justice have never existed in separate worlds

A legal right may exist on paper, but exercising that right can become extraordinarily difficult when a person is simultaneously worried about paying the mortgage, keeping the electricity on, buying groceries, or putting gas in the car.

As the Supreme Court begins another term, Americans will once again watch the Justices consider questions involving constitutional rights, federal law, the authority of government, and the responsibilities of individuals and institutions.

The cases will differ. The legal questions will differ. And reasonable people will disagree about how many of those cases should be decided.

But the words above the Court remain constant: Equal Justice Under Law.

Nearly a century after those words were placed on the Supreme Court Building during a period of profound economic uncertainty, their message remains relevant.

Justice should not belong only to those who can afford to wait for it.

Consumer Legal Funding helps give individuals the financial breathing room to allow the legal process to work. It does not determine the outcome of a case. It does not finance the litigation. And it does not replace the attorney-client relationship.

It helps consumers address the realities of everyday life while their legal claims proceed.

That is why Consumer Legal Funding belongs in the broader access-to-justice conversation.

Because the promise carved above our nation's highest court should extend beyond the courthouse steps. The strength of a person's legal rights should not be determined by the size of their bank account.

Consumer Legal Funding: Funding Lives, Not Litigation.

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

Commercial Consumer

ClaimAngel Reports $144M Deployed and 30,000 Fundings on Consumer Legal Funding Marketplace

South Florida consumer legal funding marketplace ClaimAngel says it has deployed more than $144 million across over 30,000 individual fundings since launching in April 2023, positioning standardised pricing as its answer to the cost criticisms that dog the consumer funding sector.

As reported by Refresh Miami, the platform runs a marketplace in which 27 funding providers compete for cases, with funders reserving a case in an average of 11 seconds. Advances carry 27.8% simple interest with no compounding and a 2x cap on total repayment, and remain non-recourse — plaintiffs owe nothing if the case is lost.

The company reports serving more than 14,500 plaintiffs and over 750 law firms, with 46 employees. A Case Equity product lets plaintiffs draw against expected case value for living expenses while litigation is pending.

ClaimAngel was co-founded by Jeremy Alters, a trial lawyer of more than two decades who was disbarred by the Florida Supreme Court in 2018 for misusing client funds, and his son Logan Alters. "I did things wrong. They were my fault. I take full responsibility for it," Jeremy Alters said, describing the company as "born out of an ethics issue." He applied for readmission to the Florida Bar in 2025.

Planned expansions include attorney funding, a secondary marketplace for buying and selling existing positions, and AngelScore, a data-driven underwriting system.

Consumer

Consumer Legal Funding: Beyond the Headlines, the Facts Tell a Different Story

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

Recent criticism has raised questions about cost, Wall Street investment, settlement influence, medical treatment, litigation costs and consumer protection. Those questions deserve answers. But the answers should begin with what Consumer Legal Funding actually is, how consumers use it, and the protections states are putting into law.

A Debate That Needs More Precision

Consumer Legal Funding has become the subject of increasingly negative headlines. Some articles characterize the product as a “lawsuit loan” or “predatory lending.” Others connect it to Wall Street securitization, social inflation, nuclear verdicts, medical treatment, prolonged litigation or outside influence over settlements. Still others discuss Consumer Legal Funding in the same breath as multimillion-dollar commercial Third-Party Litigation Financing.

Those are serious claims. Consumers deserve transparency. The legal system must remain independent. Attorneys must exercise their own professional judgment. Funding companies should not control settlements, direct medical treatment or pay improper referral fees.

But a serious debate also requires precision. Allegations involving a particular company should not define an entire industry. Commercial litigation investments should not be treated as interchangeable with funds provided to an injured consumer for household expenses. And criticism should be weighed against something frequently missing from the discussion: what consumers themselves say about why they use the product and whether it helped them.

ARC’s 2026 Consumer Legal Funding Survey provides that perspective. Across most survey questions, 576 consumers responded. The results portray a product being used during genuine household financial disruption, not as a mechanism for financing litigation.

Start With the Consumer, Not the Lawsuit

The typical need for Consumer Legal Funding begins after the event giving rise to the legal claim has already occurred. A person is injured, income is interrupted, and household obligations continue while an insurance claim or lawsuit remains unresolved.

According to ARC’s 2026 survey, 72.08% of respondents were not employed when they received Consumer Legal Funding. Among respondents addressing the reason, 65.72% said their lack of employment resulted from the circumstances that created the need for funding, such as an automobile accident.

The financial pressure was basic and immediate. 73.03% reported struggling with rent or mortgage payments, 61.30% with utilities and 60.07% with food. The survey did not depict consumers primarily seeking money for attorneys, experts, depositions or court costs. It depicted people trying to maintain ordinary household stability while a legal claim remained pending.

That distinction is now reflected in law. Kansas’s Transparency in Consumer Legal Funding Act defines Consumer Legal Funding as a non-recourse transaction involving a contingent right to potential proceeds and expressly states that the funds are used for household or personal expenses, not expenses directly related to prosecuting the legal claim. Utah’s 2026 law separately defines consumer maintenance funding and commercial maintenance funding.

That is not semantics. It is the difference between funding a person’s life during litigation and funding the litigation itself.

Wall Street, Securitization and the Underlying Consumer Transaction

Recent reporting has focused heavily on Consumer Legal Funding receivables being financed or securitized by institutional investors. That may sound far removed from the consumer who needs help paying rent, but two questions should be separated.

How a funding company obtains capital is one question. What rights the company obtains from the consumer is another.

Institutional capital does not by itself determine whether the consumer received clear disclosures, whether the transaction was non-recourse, whether the company can influence the claim, or whether the funds were used for household expenses. Those questions are governed by the contract and, increasingly, state law.

There is also an important caution about using broader allegations of personal-injury fraud to support criticism of Consumer Legal Funding. The New York Times article discussing Wall Street investment also referenced lawsuits brought by Uber alleging that personal-injury law firms and medical providers conspired to pursue exaggerated or fabricated injury claims. Yet just days before the Times article was published, a federal judge in New York dismissed Uber’s case against three personal-injury firms and related defendants. The court concluded that Uber had not plausibly alleged the RICO conspiracy it claimed and had not yet established the required injury. The dismissal does not establish that every underlying personal-injury claim was legitimate, and Uber has pursued similar litigation elsewhere. But it is an important reminder that allegations contained in a lawsuit are not the same as proven facts and should not be used to characterize Consumer Legal Funding generally.

Kansas law even distinguishes the Consumer Legal Funding company from banks, lenders, financing entities and special-purpose entities that finance the company or receive security interests in contracts. Securitization can be a legitimate subject for oversight, but it should not replace analysis of the actual consumer transaction.

The “Predatory Lending” and Cost Criticism

One of the most common criticisms is that Consumer Legal Funding is expensive. Articles frequently convert charges into annualized percentage rates, highlight compounding, or present examples in which the amount due grows substantially while a case remains unresolved.

Cost matters. Consumers should know what they are agreeing to pay, how charges accumulate and the maximum amount that can become due. But calling the transaction a high-interest “loan” can leave out an essential feature: Consumer Legal Funding is non-recourse.

Unlike conventional recourse credit, repayment depends on a recovery from the legal claim. Kansas law requires the contract to state that if there is no recovery, the consumer owes nothing to the funding company, absent fraud or a material contractual violation. California similarly defines Consumer Legal Funding as a non-recourse transaction involving the purchase of a contingent right to potential legal proceeds.

That does not make price irrelevant. It makes transparency more important.

Modern state regulation addresses that concern directly. Kansas requires contracts to clearly disclose the funded amount, one-time charges, how charges accrue, a payment schedule and the maximum total amount the consumer may be obligated to pay. It also provides a 10-business-day right to cancel. New York likewise requires clear contracts, disclosure of charges and maximum obligations, and a rescission period.

The constructive response to concerns about cost is not to pretend cost does not matter. It is to ensure consumers receive understandable information before entering the transaction and meaningful time to reconsider it.

Do Consumers Understand What They Are Signing?

Another recurring criticism is that financially stressed consumers may not understand the agreements they enter.

The ARC survey provides a direct consumer-reported counterpoint. 87.70% of respondents said they fully understood the terms of their contract, while 90.42% said they understood their financial obligations.

Those numbers should not be used to argue that disclosure requirements are unnecessary. They support the opposite conclusion: understandable contracts and meaningful disclosures should be the standard.

Kansas requires contracts to use common, everyday language and to be completely filled in before presentation to the consumer. New York similarly requires contracts to be clear and coherent and requires attorney acknowledgment that mandatory disclosures have been reviewed with the consumer. These protections are designed to reinforce informed decision-making rather than substitute for it.

The survey also provides another important measure of consumer experience: 90.70% said they would use Consumer Legal Funding again if they were in need, and 87.35% said they would recommend the company they worked with.

No survey means every consumer had a positive experience. But those results deserve to be part of any discussion that portrays consumers broadly as victims of a product they neither understand nor value.

Can a Funder Control a Settlement or Prolong Litigation?

Some of the most serious criticism suggests that funding companies may prevent settlements, pressure consumers to hold out for larger recoveries or interfere with an attorney’s professional judgment.

Consumer Legal Funding companies do not operate that way.

Kansas law states that a funding company has no role in deciding whether, when or for how much a legal claim is settled. It may seek information about the status of the claim, but it may not interfere with the independent professional judgment of the attorney.

That also addresses the broader claim that Consumer Legal Funding necessarily prolongs lawsuits. A consumer receiving funds for rent or utilities does not transfer control of the legal claim to the funding company. Settlement decisions remain with the consumer, advised by counsel.

At the same time, a consumer facing eviction, utility shutoff or difficulty buying groceries may experience intense pressure to resolve a claim quickly for reasons unrelated to its legal merits. Consumer Legal Funding is intended to provide household liquidity during that period, not dictate when a case settles.

Referrals and Individual Allegations

Recent media coverage has also highlighted allegations involving referrals and relationships among funders, lawyers and medical providers. These allegations warrant careful attention, but different financial arrangements should not be collapsed into a single category.

Modern laws also address referral relationships. Kansas prohibits funding companies from paying or accepting commissions, referral fees or other consideration involving attorneys, law firms and specified medical providers. It also restricts attorneys and their immediate family members from holding certain financial interests in a funding company serving the attorney’s consumer. California prohibits specified commissions and referral fees to attorneys and law firms. New York requires attorney acknowledgment concerning referral consideration.

If an individual company is alleged to have crossed those lines, the facts should be investigated and the applicable law enforced. But alleged misconduct is an argument for enforceable standards, not for treating prohibited conduct as the defining feature of Consumer Legal Funding.

Nuclear Verdicts, Social Inflation and the Conflation Problem

Insurance, trucking and tort-reform commentary increasingly connects “litigation funding” with nuclear verdicts, social inflation, higher insurance costs and a so-called tort tax.

The problem is that “litigation funding” can describe very different products.

Commercial Third-Party Litigation Financing may involve multimillion-dollar investments used to finance litigation expenses. Attorney portfolio financing and medical financing involve other arrangements. Consumer Legal Funding, by contrast, is a consumer-facing, non-recourse transaction designed to provide funds for personal and household needs.

Evidence concerning one category should not automatically be treated as evidence concerning another. The ARC survey reinforces the point: consumers reported struggling with housing, utilities and food. Kansas law expressly says Consumer Legal Funding does not include expenses directly related to prosecuting the claim, and Utah distinguishes consumer and commercial funding in statute.

If critics contend that Consumer Legal Funding itself causes nuclear verdicts or social inflation, the appropriate question is straightforward: what evidence specifically connects this consumer product to that outcome? Broad statistics about commercial litigation investment or aggregate tort costs do not answer that question by themselves.

The Claim That Consumer Legal Funding Is Unregulated

Another recurring impression is that Consumer Legal Funding operates in an unregulated environment. That description is increasingly difficult to square with the laws states have enacted.

Kansas requires clear contracts, extensive disclosures, a 10-business-day rescission period, a maximum repayment disclosure, attorney involvement, prohibitions on improper referrals, restrictions on funder control and enforcement authority.

New York’s Consumer Litigation Funding Act establishes regulation addressing disclosures, registration, attorney responsibilities, rescission, prohibited conduct and repayment. California’s Consumer Legal Funding Act regulates contract terms, referrals, disclosures and the period during which charges can accrue. Utah requires registration and disclosures, restricts certain attorney-provider relationships and expressly separates consumer from commercial funding.

Missouri has also enacted statutory provisions governing Consumer Legal Funding as part of its broader legislation addressing judicial proceedings.

These approaches are not identical, and reasonable policymakers can disagree about particular regulatory details. But collectively they demonstrate that there is a workable middle ground between no regulation and eliminating the product.

Consumer protection and consumer access do not have to be opposing goals.

Listen to the Consumers

The recent scrutiny of Consumer Legal Funding can serve a useful purpose if it produces better information, stronger standards and more precise distinctions.

Consumers should understand the cost. Contracts should clearly state what may be owed. Funding companies should not control settlements. Attorneys should remain independent. Improper referrals should be prohibited. Consumer funds should not be confused with money used to prosecute litigation. Allegations of misconduct should be investigated and violations enforced.

Those principles are increasingly embedded in state law.

But the debate should also include the people who use the product. ARC’s 2026 survey found consumers facing disrupted employment and difficulty paying for housing, utilities and food. It found high reported understanding of contracts and financial obligations. More than nine in ten respondents said they would use Consumer Legal Funding again if they needed it, and nearly nine in ten would recommend their funding company.

That does not eliminate every policy question. It does show that many consumers believe the product has value during a difficult period in their lives.

The better approach is not to ignore criticism or eliminate consumer choice. It is to address legitimate concerns with clear disclosures, rescission rights, attorney safeguards, prohibitions on interference, restrictions on improper financial relationships and effective enforcement, while preserving access to a non-recourse product designed to help consumers meet household needs while legal claims are pending.

Consumer Legal Funding: Funding Lives, Not Litigation.