Why Personal Injury Plaintiffs Need Pre-Settlement Funding | The Legal Lifeline

[00:00:00] Aaron Winston: Welcome to the Legal Lifeline Podcast, the official podcast of Express Legal Funding. I’m your host, Aaron Winston, Strategy Director here at Express Legal Funding. In today’s episode, we’re diving into a pressing issue that affects thousands of personal injury plaintiffs each year,

The financial stress they face while waiting for their cases to settle.

Our AI cohosts, Sam and Kim, will explain why this struggle is so common and how pre-settlement funding can provide a vital financial lifeline during this difficult time. Let’s get started.

[00:00:38] Sam: Welcome to the Deep Dive. Today we’re looking at something, um, really significant in personal injury cases.

[00:00:44] Kim: Yeah. What’s that?

[00:00:45] Sam: It’s the financial strain, the actual money problems people face while they’re waiting for their lawsuit to settle. It’s often kind of overlooked.

[00:00:52] Kim: Ah, right. While the legal wheels are turning.

[00:00:54] Sam: Exactly. We’ve got some info here from Express Legal funding. Mm-hmm. A couple of blog posts, a glossary, and a definition to talk about this. Okay. And. Our mission today really is to understand why. Why do people in these situations find themselves needing cash, sometimes desperately, before the case is even over? I.

[00:01:13] Kim: That’s a great focus because we often just think about the potential payout at the end, right? Mm-hmm. But the journey there, the waiting period, uh, that’s where the real financial crunch often happens. These sources really highlight that tension.

[00:01:27] Sam: What tension is that specifically?

[00:01:29] Kim: It’s, well, it’s the fact that legal processes, especially complex ones like injury or malpractice suits, just take time.

A long time,

[00:01:37] Sam: months, years, oh,

[00:01:38] Kim: easily. Months, sometimes even years. Like the sources point out. It’s not quick.

[00:01:42] Sam: Okay, so you’ve got this long waiting period,

[00:01:44] Kim: Right? And during that time, life doesn’t stop. The financial pressures just keep building.

[00:01:49] Sam: Like what kind of pressures?

[00:01:50] Kim: Well, first, there are the costs of the lawsuit itself.

You know, attorney fees might be contingency-based, but there are still court costs, filing fees, maybe paying for expert reports or testimony. It adds up.

[00:02:04] Sam: Okay, so costs related to the case, but what about just living?

[00:02:09] Kim: That’s the other huge piece. The sources really emphasize lost income. If you’re seriously injured, you probably can’t work, or at least not like you used to.

[00:02:17] Sam: Right? Your paycheck stops or shrinks dramatically.

[00:02:20] Kim: Precisely, but, and this is the kicker. Your bills don’t stop

[00:02:24] Sam: rent. Mortgage, utilities,

[00:02:26] Kim: groceries, car payments, all the usual stuff. It keeps coming. And then in personal injury cases, you layer on top of that the medical expenses.

[00:02:34] Sam: Oh yeah. Doctor visits, therapy,

[00:02:36] Kim: medications, maybe ongoing treatment, rehabilitation.

It can be a mountain of bills, often with out-of-pocket costs, even if you have insurance.

[00:02:43] Sam: So it’s like a perfect storm. Income down or gone. Regular bills, continuing legal costs creeping up, and potentially huge medical bills landing.

[00:02:53] Kim: You got it. That cycle creates immense financial stress. It really paints a picture of why someone would need help before any settlement money arrives,

[00:03:03] Sam: which naturally leads to solutions like.

Well, what are sources called? Pre-settlement funding.

[00:03:09] Kim: Exactly. Sometimes called a lawsuit, cash advance, or you might hear pending lawsuit loan, though it’s not really a typical loan.

[00:03:17] Sam: Okay, so what is it? Basically,

[00:03:18] Kim: It’s an arrangement where a company provides the plaintiff, the injured person suing with a sum of money now based on the expected future settlement of their case

[00:03:28] Sam: In advance of the potential settlement.

[00:03:29] Kim: Sort of, yeah, but the really critical part, which the source stress is that it’s almost always non-recourse.

[00:03:35] Sam: Nonrecourse. What does that mean in plain English? If things go south with the case,

[00:03:40] Kim: It means you only pay the money back if you win your case or get a settlement

[00:03:43] Sam: Only if you win.

[00:03:44] Kim: That’s a general structure?

Yes.

[00:03:45] Sam: Mm.

[00:03:46] Kim: If you lose the lawsuit for whatever reason, you typically owe the funding company nothing. Zip.

[00:03:51] Sam: Wow. Okay. So, unlike a bank loan.

[00:03:53] Kim: Totally different. No credit checks, usually no monthly payments while you wait for the case outcome. And crucially, no personal debt hanging over you if the case doesn’t succeed.

[00:04:03] Sam: That sounds like a pretty big deal for someone already in a tight spot. Financially.

[00:04:07] Kim: It is. It removes a layer of risk. And the other thing the sources mention is. Speed.

[00:04:13] Sam: How quickly are we talking?

[00:04:14] Kim: Often, approvals can happen pretty fast. Sometimes within 24 to 48 hours. Once they have the needed info from the attorney, that can be vital if someone’s facing, you know, eviction or urgent medical bills.

[00:04:27] Sam: Okay, so let’s circle back to the why. We’ve established the pressure. Why civically seek out this kind of funding? The sources list? A few main reasons. The first one seems obvious, covering basic living costs.

[00:04:39] Kim: Absolutely. Like we said, these cases drag on if you can’t work, how do you pay rent next month? How do you buy food?

This funding can be a lifeline just to keep your head above water and maintain basic stability.

[00:04:50] Sam: Makes sense. The second reason they highlight is paying for medical expenses.

[00:04:53] Kim: Yeah, and this is huge in personal injury. Those copays, deductibles. Treatment insurance might not fully cover, such as physical therapy. It all adds up fast.

[00:05:02] Sam: So the funding can bridge that gap, allow you to get the treatment you need without waiting.

[00:05:06] Kim: Exactly. It lets people focus on recovery without the added stress of figuring out how to pay for it immediately.

[00:05:11] Sam: Okay. And the third reason the source is mentioned is maybe a bit more strategic.

[00:05:16] Kim: Hmm.

[00:05:17] Sam: Avoiding low settlement offers.

[00:05:19] Kim: Right. This is really important. Think about it. If you’re desperate for cash, really feeling the squeeze,

[00:05:25] Sam: You might just take the first offer the insurance company throws at you, even if it’s low

[00:05:29] Kim: Precisely. Insurance companies know plaintiffs are often under financial pressure. They might offer a quick but lower amount, hoping you’ll take it out of desperation.

[00:05:38] Sam: So pre-settlement funding gives you some breathing room.

[00:05:41] Kim: It can. Yes. Yeah. It provides that financial cushion, so you’re not forced to settle cheap just to pay the bills today. It allows you and your attorney to negotiate for a fair amount that truly reflects your damages, potentially leveling the playing field a bit.

[00:05:54] Sam: Interesting.

[So it’s not just about immediate survival, but also potentially about achieving a 00:06:00] better outcome in the lawsuit itself.

[00:06:02] Kim: That’s definitely one of the key arguments for it.

[00:06:04] Sam: So, who can actually get this funding? Is it available to anyone filing a lawsuit?

[00:06:09] Kim: Not quite. There are usually some basic requirements.

First, you need an active lawsuit, typically one where a cash settlement is possible. Okay? Second, you generally need to have hired an attorney, and usually one who is working on a contingency fee.

[00:06:24] Sam: meaning the lawyer only gets paid if you win.

[00:06:27] Kim: Correct. That aligns the lawyer’s interest with winning the case.

And third, the funding company needs to believe your case is strong. They’ll look at, you know, liability. Is it clear who was at fault and the potential damages they’re making a financial bet on your case, essentially?

[00:06:43] Sam: Right, because they only get paid back if you win.

[00:06:44] Kim: Exactly. So they need to assess the likelihood of that happening.

[00:06:47] Sam: And the attorney you mentioned. They seem pretty central to this whole thing.

[00:06:52] Kim: Oh, absolutely Critical. Yeah. The funding company relies heavily on the attorney.

[00:06:56] Sam: How so?

[00:06:56] Kim: They’ll need to talk to your lawyer to get case documents, understand the injuries, the facts, the legal strategy, and the potential value.

Basically, the attorney provides the court with information, which the funding company uses to decide whether to offer funding and how much.

[00:07:10] Sam: So you really need your lawyer on board with this.

[00:07:12] Kim: You do. And the sources mentioned that sometimes attorneys have concerns.

[00:07:17] Sam: Like what?

[00:07:17] Kim: Some might worry. It adds another party taking a piece of the final settlement.

Or maybe they feel like it’s subtly pressure negotiations in a different way. It’s definitely something you need to discuss openly with your attorney.

[00:07:28] Sam: Good advice. Explain why you need it. Maybe ask them for reputable companies,

[00:07:32] Kim: Right? Make sure they’re comfortable providing the necessary info. Talk about how we payment works so everyone’s clear.

Communication is key.

[00:07:40] Sam: Okay, this all sounds potentially helpful. But there’s usually a catch, right? What about the cost? Is this funding expensive?

[00:07:48] Kim: That’s the main trade-off, and something the sources are clear about. Yes, it typically costs more than a traditional loan.

[00:07:55] Sam: Why is that?

[00:07:56] Kim: Because of the risk the funding company takes.

Remember, if you lose your case. They get nothing back. That non-recourse feature means they bear significant risk,

[00:08:07] Sam: So, they charge higher fees to compensate for that risk across all the cases they fund?

[00:08:12] Kim: Exactly. The sources mentioned typical fees might range say from 2% to 4% per month, but this can vary a lot.

It’s absolutely crucial to understand the fee structure.

[00:08:22] Sam: What should people look out for?

[00:08:24] Kim: Read the contract carefully. Are the fees simple or compounding? Are there hidden application fees or other charges? What’s the total amount you’ll likely have to repay from your settlement? Transparency is vital.

[00:08:36] Sam: Get the full picture before signing anything.

[00:08:38] Kim: Definitely one positive point. The sources note, though, is that applying for or receiving this funding generally doesn’t impact your credit score.

[00:08:46] Sam: because it’s not a traditional loan based on creditworthiness.

[00:08:49] Kim: Correct. It’s based on the merits of your legal case.

[00:08:51] Sam: Are there alternatives people should consider before going this route?

[00:08:55] Kim: Yes. And it’s wise to explore them. The sources briefly mentioned things like personal loans from a bank or credit union, though eligibility might be tough if you’re injured and not working.

[00:09:06] Sam: Mm-hmm.

[00:09:07] Kim: Borrowing from family or friends, if that’s an option.

Negotiating payment plans with medical providers or other creditors, maybe even crowdfunding in some situations, or looking into local or federal assistance programs.

[00:09:20] Sam: So other avenues exist, but they each have their own pros and cons.

[00:09:23] Kim: Right. Pre-settlement funding is just one tool in the toolbox specifically designed for this situation, but it comes with its own costs and considerations.

[00:09:31] Sam: So boiling it all down.

The core reason this need for funding emerges seems to be that gap, the often long gap between injury and settlement, filled with lost income, ongoing bills, and the costs of just pursuing justice.

[00:09:46] Kim: That’s really the heart of it. The legal system takes time, but financial needs are immediate. Pre-settlement funding aims to bridge that specific gap.

[00:09:52] Sam: It provides that immediate relief, potentially easing stress, and maybe even strengthening the plaintiff’s position.

[00:09:59] Kim: It can, but as we’ve discussed, it’s crucial for anyone considering it to really understand the process, the non-recourse nature, the vital role of their attorney, and especially the costs involved.

[00:10:11] Sam: Making an informed decision is key.

[00:10:13] Kim: Always.

[00:10:13] Sam: It really makes you think, doesn’t it? The fact that this type of funding exists highlights a potential vulnerability in the system for people trying to recover damages.

[00:10:22] Kim: It does. It raises questions about the time it takes to resolve these cases and whether there are adequate support systems for individuals dealing with the financial fallout of a serious injury while navigating the legal process.

What does the need for this industry say about how we support people seeking justice?

[00:10:40] Sam: That’s a powerful thought to leave our listeners with. If this topic has resonated with you or if you know someone going through this, definitely check out the resources from Express Legal Funding for more details.

Understanding these options is the first step.

[00:10:53] Aaron Winston: Thanks for listening to the Legal Lifeline. For more guides, resources, and insights about pre-settlement funding, be sure to visit expresslegalfunding.com. You can apply for funding directly on our website anytime, 24/7. Until next time, stay informed and stay empowered.