[00:00:09] Aaron Winston: Welcome to The Legal Lifeline podcast, the official podcast of Express Legal Funding. I’m your host, Aaron Winston.
Each week we bring you clear, practical insights into the world of law, personal injury cases and the financial solutions that help people get through these tough times. In today’s episode, our AI co-hosts, Sam and Kim, break down non-recourse pre-settlement funding.
What it is, how it works, and why it can be such an important resource for plaintiffs waiting on their cases to settle.
[00:00:44] Sam: Okay, let’s unpack this. Imagine you’re right in the middle of a lawsuit, maybe personal injury claim bills are piling up. Maybe you can’t work on the case. It could drag on for months, maybe even years. What do you do? Today, we’re doing a deep dive into something called non-recourse pre-settlement funding.
We wanna really get what it is, how it works as a tool during litigation,
[00:01:06] Kim: Right? And it can be a really powerful, optional lifeline for many people. Our goal here in this deep dive is to give you a super clear picture. What is non-recourse pre-settlement funding? How does it actually work? And importantly, why is it so different from just getting a regular loan?
By the end, you’ll see it’s not just about the money, it’s also strategic.
[00:01:26] Sam: Okay. Let’s get right to it, then. That name, non-recourse pre-settlement funding. It’s kind of a mouthful. What makes that non-recourse part such a big deal?
[00:01:34] Kim: Well, at its core, it’s basically a cash advance. It’s for plaintiffs, people with ongoing legal claims, and it’s based on what they expect to get from a settlement or a court award.
But here’s the crucial part. The non-recourse bit. Repayment is only required if you win or settle your case. That’s it. If you lose your case, you owe nothing back. Zero. The funding company can’t come after you personally for that money.
[00:02:00] Sam: Wow. Okay. So that non-recourse thing completely shifts the risk, right?
Like with a normal loan, the risk is all on you. You pay it back, win or lose. But there is the risk of whether the lawsuit succeeds or fails.
[00:02:12] Kim: Yeah.
[00:02:12] Sam: That’s entirely on the funding company.
[00:02:14] Kim: Exactly. And that difference is, well, it’s fundamental. It means the funding company is effectively placing a bet on the success of your case.
And this really empowers plaintiffs. Think about it without that crushing financial pressure, breathing down your neck, you’re not forced into taking some low ball settlement offer just to pay the rent. It gives you breathing room. It gives your attorney leverage to fight for the full value of your claim instead of settling out of sheer desperation.
[00:02:37] Sam: That sounds incredibly helpful for someone backed into a corner financially. But how does the process actually work? Is it like super complicated to get?
[00:02:47] Kim: Actually, it’s designed to be pretty straightforward. Usually, it starts with you or your attorney, often applying online or over the phone. Just basic case info. And importantly, there’s no credit check for you personally, no upfront fees just to apply.
[00:03:01] Sam: Okay. No credit check. That’s interesting. Then what?
[00:03:04] Kim: Then the funding company takes a look. They evaluate your case, but they do this by talking directly with your attorney. They’ll assess how strong the claim seems and whether liability is clear.
What’s the potential settlement range look like? If they approve it based on the case merits, you get an agreement to review.
Once signed, funds can be sent out really quickly, sometimes within 24, maybe 48 hours.
[00:03:25] Sam: That fast. Yeah. Okay. And repayment, you said, only happens if you win.
[00:03:30] Kim: Correct. Repayment comes directly out of the settlement or the court award money, but only if you win or settle.
If there’s no recovery, there’s no repayment.
[00:03:38] Sam: Got it. So who actually qualifies for this? Is it available for any kind of lawsuit?
[00:03:43] Kim: That’s a really important point. Generally, no, not just any lawsuit, you need to have a valid, pending civil lawsuit. Most commonly, we see this with personal injury cases, things like car accidents, slip and falls, medical malpractice, and maybe wrongful death claims.
Those are typical. The approval is based purely on the strength and potential value of your lawsuit itself, not your personal financial situation or credit score.
[00:04:08] Sam: You mentioned the attorney.
[00:04:09] Kim: Yes, absolutely crucial. You must be represented by a licensed attorney, and typically that attorney needs to be working on what’s called a contingency fee basis, meaning they only get paid if you win your case.
Plus, the attorney has to be willing to cooperate, share case documents, talk to the funder, and sign off on the funding agreement. Their involvement is mandatory.
[00:04:29] Sam: Okay, so it provides that immediate relief. Shifts the risk. Yeah. But there has to be a cost, right? The funding company’s taking on all that risk.
Mm-hmm. What are the financial downsides? The things a plaintiff really needs to weigh up carefully.
[00:04:39] Kim: You’ve hit on probably the most critical consideration, and it’s often not fully grasped upfront. While it’s a lifeline, this funding is. Typically expensive. Very expensive. Sometimes the fees aren’t simple bank loan interest.
They’re often structured using compounding rates. This means the amount you owe can grow quite rapidly over time.
[00:04:59] Sam: Compounding rates. How does that work in practice?
[00:05:01] Kim: Well, for example, an agreement might have a rate of, say. Three to 5% per month. And that rate compounds. So if your case drags on for, let’s say, two years, the total amount repaid from your settlement could potentially double or even triple the original advance amount.
This can significantly reduce your final net recovery. The money you actually walk away with, sometimes the funding costs can even end up being more than your attorney’s fees in a long case.
[00:05:26] Sam: Wow, okay. So that’s a serious factor to consider. Yeah. It’s not bad money. It comes at a significant price because of the risk the funder takes
[00:05:34] Kim: Precisely. It’s the cost associated with transferring that risk. That’s why it is absolutely vital that you have your attorney review the funding agreement very, very carefully, line by line.
You need to understand exactly how those fees are calculated, how they accrue over the life of the case, and what the total potential repayment could look like under different scenarios.
[00:05:54] Sam: That’s such a critical point. Transparency is key there.
[00:05:57] Kim: Yeah.
[00:05:58] Sam: So, wrapping this up, understanding non-recourse pre-settlement funding isn’t just about knowing there’s a way to get cash upfront. It’s about recognizing it as a potential strategic tool. One that can level the playing field, maybe allowing plaintiffs to resist financial pressure and really fight for the justice they feel they deserve.
[00:06:16] Kim: Exactly right. The main benefits are clear. You get immediate cash for necessities. No hit to your credit, absolutely zero risk of repayment if you lose your case. And crucially, it reduces that immense pressure to settle too early for too little.
But as we discussed, the trade-off is that the funding and its associated fees will reduce your final settlement payout sometimes substantially.
It’s a balancing act.
[00:06:39] Sam: So what does this all mean for you, the listener, thinking about this option then? It’s not just financial, it’s about power dynamics in litigation. It encourages you to consider how knowing this kind of funding exists might change how you or someone you know might approach a legal battle.
Could it allow decisions based more on the merits of the case rather than just immediate financial need? It’s definitely a complex tool, clear benefits, significant costs, something to really chew on.
