Every year, thousands of personal injury victims struggle to make ends meet while waiting for their lawsuit to settle. Medical bills pile up, wages are lost, and basic living expenses continue. Legal funding, also known as pre-settlement funding, is a financial service that provides plaintiffs with a cash advance based on the expected value of their lawsuit.
Unlike traditional loans, legal funding is non-recourse, meaning repayment is only required if the plaintiff wins or settles their case. This type of funding helps cover living expenses during the legal process without impacting personal credit or requiring collateral. Despite its benefits, misinformation and myths often prevent people from seeking help.
Why Debunking Legal Funding Myths Matters
Legal funding helps injury victims bridge the financial gap between filing a claim and receiving compensation. Unfortunately, many dismiss it due to rumors or confusion about its safety and eligibility.
In this article, the editorial team at Express Legal Funding debunks the 10 most common myths about legal funding, explains the facts, and empowers you to make informed financial decisions during your case.
The 10 Legal Funding Myths – Explained and Debunked
Myth #1: “Legal Funding Is Just Another Type of Loan”
- Misconception: Legal funding works like a traditional loan, with monthly payments and personal liability.
- Truth: Legal funding is a non-recourse cash advance. You only repay if you win or settle your case. If unsuccessful, you owe nothing. No credit score impact, no collections, no financial risk.
- Why It Matters: This myth discourages victims from seeking help. Legal funding is risk-free, offering financial breathing room without debt.
Read our guide: Lawsuit Loans vs. Pre-Settlement Funding
Myth #2: “Getting Legal Funding Is Illegal or Shady”
- Misconception: Legal funding operates in a legal gray area or is illegal.
- Truth: Legal funding is legal and widely used in personal injury cases across the U.S. States have consumer protection laws regulating the industry, and reputable companies ensure compliance and transparency.
- Why It Matters: Fear of illegality prevents victims from exploring legal funding. Pre-settlement funding is a legitimate, regulated service providing fair access to cash.
Myth #3: “The Legal Funding Industry Is Unregulated”
- Misconception: Legal funding companies operate without oversight, charging hidden fees.
- Truth: Regulation varies by state, but legal funding is subject to consumer protection laws and ethical guidelines. States like Missouri, Ohio, and Oklahoma have legislation ensuring transparency and protecting plaintiffs’ rights. Leading providers are members of organizations like ALFA, ARC, and LFAFF, enforcing strict conduct codes.
- Why It Matters: Believing the industry is unregulated discourages trust in legal funding providers. Reputable companies are transparent, regulated, and aligned with your attorney’s role.
Learn more in our guide: How to Choose a Trustworthy Legal Funding Company?
Myth #4: “You Need Good Credit or a Job to Qualify”
- Misconception: Legal funding requires a solid credit history or steady employment.
- Truth: Legal funding is based on your case’s strength, not personal finances. No credit checks, income requirements, or employment verifications. If you have a qualifying claim and work with a contingency-fee attorney, you may be eligible.
- Why It Matters: Plaintiffs recovering from injuries often aren’t working and may have poor credit. This legal funding myth causes self-disqualification. Pre-settlement funding is accessible to injury victims, supporting those when traditional loans won’t.
Myth #5: “Legal Funding Is Too Expensive to Be Worth It”
- Misconception: Legal funding companies charge high fees, consuming most of the settlement.
- Truth: Legal funding has costs, but reputable companies offer transparent, capped rates, advancing a portion of your expected settlement, usually 10% to 20%. Compared to high-interest credit cards or payday loans, pre-settlement funding can be more affordable.
- Why It Matters: This myth leads plaintiffs to accept unfair offers from insurance companies just to survive. Legal funding provides time and stability to hold out for a fair settlement.
Myth #6: “Legal Funding Companies Take Over Your Case”
- Misconception: Legal funding companies influence legal strategy, pressuring attorneys or interfering with decisions.
- Truth: Legal funding companies are prohibited from participating in case strategy or influencing settlement decisions. Your attorney remains in control. A funder’s role ends once the advance is issued.
- Why It Matters: This legal funding myth creates fear of losing control. Pre-settlement funding supports you, allowing your lawyer to fight for the best outcome.
Myth #7: “You’ll Be Forced to Settle Your Case Early”
- Misconception: Legal funding companies pressure quick, low settlements.
- Truth: Funders have no authority to influence when or how your case is settled, and this is typically stated clearly in the funding agreement. They benefit when your final settlement is higher, so their interests are aligned with yours. The longer your attorney has to negotiate for fair compensation, the better the outcome for both you and the funder.
- Why It Matters: This myth discourages people from applying for legal funding, causing them to miss out on the financial breathing room it can provide. Without that support, plaintiffs may feel pressured to accept a low settlement early. Pre-settlement funding gives you the time and stability to hold out for the full compensation you deserve.
Myth #8: “The Application Process Takes Too Long”
- Misconception: Applying for legal funding is like a bank loan, with extensive paperwork and long wait times.
- Truth: The process is fast and simple. Most applications take minutes, and funds are often approved within 24 to 48 hours.
- Why It Matters: This myth causes victims to assume legal funding won’t help in time. Legal funding offers quick financial relief. The main delay is usually waiting for your attorney to provide case details.
Myth #9: “You Can Use Legal Funding to Pay Your Personal Injury Lawyer”
- Misconception: Pre-settlement funding can pay a lawyer’s retainer or legal fees.
- Truth: Legal funding is for personal use, not attorney fees. Lawyers work on a contingency basis, paid from the settlement.
- Why It Matters: Confusing legal funding’s purpose can lead to misuse. It’s meant for living expenses like rent, utilities, and groceries.
Learn more in our guide: What Are the Types of Legal Funding?
Myth #10: “All Legal Funding Companies Are the Same”
- Misconception: All legal funding providers offer the same terms and service.
- Truth: Providers vary in pricing, transparency, customer service, and funding speed. Reputable companies disclose costs upfront and communicate openly.
- Why It Matters: Choosing the wrong company can cost you. Compare options and work with trusted providers committed to fair funding.
Conclusion: Don’t Let Legal Funding Myths Keep You From Getting the Help You Deserve
Legal funding can be a powerful tool for personal injury plaintiffs. Misconceptions about legality, cost, and control stop many from getting the relief they need.
The truth is simple:
- Legal funding is legal, safe, and non-recourse.
- It provides financial breathing room without risk.
- It lets you focus on healing and winning, not on paying next month’s rent.
Need Financial Help While Your Case is Pending? Turn to Express Legal Funding
If you’re waiting on a settlement and need fast cash, Express Legal Funding can help. With over 200 five-star reviews, we’re a trusted choice for pre-settlement funding. We offer:
- Industry-leading fast approvals and same-day pre-settlement funding, often within 24 hours.
- No credit checks or upfront fees.
- Transparent contract terms. No hidden fees.
- Risk-free advances—you only repay if you win.
Talk to your attorney or apply online today to see how much funding you may qualify for.
Apply Now With Express Legal Funding for Fast Pre-Settlement Funding
Your case may be worth more, but your bills won’t wait. Let us help you bridge the gap between your accident and your settlement.
FAQs: Clearing Up Common Myths and Misconceptions About Legal Funding
What is the difference between legal funding and a loan?
Legal funding is non-recourse, meaning you only repay if you win or settle your case. If you lose, you owe nothing. Unlike traditional loans, which require repayment regardless of the outcome and often involve credit checks, interest payments, and personal liability, legal funding is based on your case, not your credit. It carries no financial risk if your case is unsuccessful.
Is legal funding legal in all states?
Yes, legal funding is legal in most U.S. states, especially for personal injury cases. However, rules and regulations vary by state. Some states have specific consumer protection laws, while others follow general contract law. It’s crucial to work with a trusted provider like Express Legal Funding, which complies with all state guidelines.
Do I need good credit to qualify for pre-settlement funding?
No, your credit score is not a factor. Pre-settlement funding is based entirely on the strength of your legal case, not your credit history, income, or employment status. There are no credit checks, collateral requirements, or proof of income needed. If you have a qualifying personal injury claim and an attorney representing you on contingency, you may be eligible for funding regardless of your financial background.
Can I use legal funding to pay my lawyer?
No, legal funding cannot be used to pay your personal injury attorney. Most injury lawyers work on a contingency fee basis, meaning they are paid a percentage of your settlement only if you win. Legal funding is intended to cover personal living expenses during the case, such as rent, groceries, or transportation, not legal fees. Your attorney’s compensation is handled separately.
Will legal funding affect my case or settlement amount?
No, legal funding does not interfere with your case or reduce your settlement. Reputable funding companies have no control over your legal strategy, negotiations, or attorney’s decisions. Your lawyer remains fully in charge. Legal funding can help you avoid settling too early by relieving financial pressure, giving your attorney more time to pursue the full value of your claim.
Is legal funding expensive?
Legal funding has costs, but it’s often more affordable and safer than high-interest alternatives. Reputable companies offer transparent, capped pricing with no hidden fees. Unlike credit cards, payday loans, or taking an early low settlement, legal funding provides flexibility to stay financially stable while your attorney fights for full compensation. You only repay if you win, making it a risk-free option for many plaintiffs.
Read our guide: 15 Alternatives to Lawsuit Loans: Pros, Cons, & How to Apply
How long does it take to get pre-settlement funding?
Most pre-settlement funding approvals happen within 24 to 48 hours after your attorney shares basic case details. The process is fast and hassle-free—no credit check or lengthy paperwork required. Once approved, funds can be sent the same day or the next business day, depending on the provider and your payment method.
How much legal funding can I get?
The amount of legal funding you can receive depends on the strength and estimated value of your case. Most legal funding companies offer advances ranging from 10% to 20% of your expected settlement. For example, if your case is projected to settle for $50,000, you may qualify for $5,000 to $10,000 in funding. Final approval is based on case details provided by your attorney and the perceived likelihood of a successful outcome.
Do I have to repay legal funding if I lose my case?
No, you don’t owe anything if you lose. Legal funding is non-recourse, meaning repayment is only required if you win or settle your case. If your case is unsuccessful, you keep the money and owe nothing back. This makes pre-settlement funding a risk-free option for injury victims needing financial support during the legal process.
How do I apply for legal funding with Express Legal Funding?
Applying with Express Legal Funding is fast, free, and risk-free. You can submit your application in minutes by visiting expresslegalfunding.com/apply-online, or call us toll-free at (888) 232-9223 to speak directly with a knowledgeable funding specialist. There’s no cost to apply, no credit check, and most approvals are completed within 24 to 48 hours after your attorney provides basic case information.
Additional Resources
Learn More About Pre-Settlement Funding:
- Can I Get Pre-Settlement Funding Without Attorney Consent?
- Legal Loans vs. Lawsuit Loans: What’s the Difference?
- Guaranteed Pre-settlement Funding: Eligibility & Approval
Industry Associations and Oversight:
