The Legal Landscape of Pre-Settlement Funding in New York: What Plaintiffs Should Know

The Legal Landscape of Pre-Settlement Funding in New York: What Plaintiffs Should Know

After an injury accident that wasn’t your fault, you may choose to file a personal injury lawsuit. This lawsuit could help you recover financial losses related to your medical costs, lost wages, and emotional trauma. Waiting to receive a financial award from the lawsuit can be difficult, though, especially when you have bills to pay now. One option is seeking pre-settlement funding.

Through these legal funding solutions, you accept a loan now that you’ll repay at the end of the case when you receive your financial award payment. This seems like a great solution to your current financial issues. However, you may wonder about the legality of pre-settlement accident lawsuit funding in New York. Seeking litigation financing is legal, but you should understand the potential dangers involved.

Legal Considerations With Pre-Settlement Funding Options

Pre-settlement funding has been available to plaintiffs in civil lawsuits for decades. By 2027, the global lawsuit financing market may reach $4.12 billion. This is a legal option for you to consider when you need financing while you wait for an expected civil lawsuit financial award.

Some states have laws in place that require lawsuit settlement funding companies to reveal information to potential borrowers, including:

  • Interest rate charged
  • Fees charged
  • Disclosure of all potential fees
  • Clear terms for repayment
  • Limits on amounts a defendant can borrow

State laws primarily focus on trying to protect the borrower from fraud from unscrupulous funding companies. Some signs that may show the funding company isn’t completely trustworthy include the following.

Not Informing Your Attorney

Legitimate funding companies will require you to have an attorney representing you. The company will want to speak with your attorney about the strength of your civil case and the potential settlement amount you could win.

If a pre-settlement funding company tells you not to tell your attorney that you are considering seeking funding, this is a red flag.

Promising Instant Money

A trustworthy funding company will not claim they will send you funding immediately after you make a request. The company must research the prospects for your civil case to be certain you have a great chance of winning a specific amount. 

After doing an investigation, the funding company may turn down your request for this money. It may not believe you have a strong enough case to justify a pre-settlement loan. It also may not believe you can win an amount large enough to cover the amount you are requesting. 

A fraudulent company that hands you money instantly without conducting an investigation could leave you with more financial hardships in the long run.

Why Pre-Settlement Funding Could Be Helpful for You

What Are the Benefits of Pre-Settlement Lawsuit Funding

When it comes to settlements and lawsuits against a third party, victims who file injury claims are common candidates to use lawsuit loan funding. Injury victims in car accident cases may have significant medical bills at the same time they cannot work. This could cause other bills to pile up, too, leaving the victim in a difficult financial situation.

Seeking car accident lawsuit funding is one way to receive some money you can use for expenses now while you wait for the lawsuit to conclude.

In a civil lawsuit that doesn’t involve an injury, you wouldn’t need pre-settlement funding for medical costs. However, some people might seek money to pay for attorneys’ fees through these funding sources.

How Commonly Do People Use Pre-Settlement Funding?

It’s difficult to determine exactly how many civil cases occur in the United States each year. Many cases settle before ever reaching court, meaning accurate publicly available statistics about the settlements don’t exist.

In 2021, the U.S. Courts recorded more than 460,000 civil filings in U.S. district courts. Some cases may settle before the civil filing occurs, though.

Considering more than 5 million injuries occurred in 2022 in motor vehicle accidents, the number of people who may qualify for auto accident lawsuit funding is significant.

Learn More About Pre-Settlement Lawsuit Funding Today

When you are facing financial hardships after injuries in an accident that someone else caused, receiving a lawsuit cash advance sounds like a helpful solution. However, you may wonder whether such a solution is actually legal. You might have some skepticism about whether it works as well as stated.

Receiving pre-settlement funding is a legal option after a car accident, construction accident, or another situation where you suffered injuries because of someone else’s negligence. Although it can help many people, it doesn’t fit everyone’s needs. To learn more about the pros and cons of pre-lawsuit funding, call Apex Legal Funding, LLC today at 1-800-377-4934 for a free consultation.


At Apex Legal Funding, LLC, we receive certain questions regularly about personal injury lawsuit funding. Our answers to these questions can help you learn more about the process.

What Are the Risks of Pre-Settlement Accident Lawsuit Funding?

The primary risk of pre-settlement accident lawsuit funding is borrowing so much that you’re upside down when the settlement finally occurs. You have to repay the borrowed amount, along with some fees, when your lawsuit wraps up and you receive a financial award. A legitimate funding company would not let you borrow too much.

How Long Does It Take to Receive Money From Pre-Settlement Loans?

Receiving money from pre-settlement loans usually takes less than two business days after approval of the loan. However, the approval process for pre-settlement funding can take anywhere from a couple of days to more than a week.

How Long Does It Take to Settle a Personal Injury Lawsuit?

The length of time required to settle a personal injury lawsuit can be a few months to a few years. The complexity of determining fault in the case and the severity of your injuries play key roles in the length of time the lawsuit requires.

Should I Use Pre-Settlement Funding?

Deciding whether to use pre-settlement funding depends on the financial circumstances you are facing related to your personal injury case. Some people need this money to pay for pending expenses now, while others can wait for the conclusion of the injury lawsuit.