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Pre-settlement Funding

November 3, 2021 • 2 min read

Just as with post-settlement funding, a pre-settlement loan or funding provides plaintiffs with non-recourse funding for essential living needs. This is issued to them while plaintiffs are still awaiting the outcomes of their case or the trial. The pre-settlement funding assists the lawyers of plaintiffs to spend more time negotiating a settlement with defendants.

Approvement of pre-settlement funding is solely based on the strength of the plaintiff’s case. Insurers and financial providers who offer pre-settlement funding will review the plaintiff’s case to ensure that the loan or investment will generate profit once the case has been settled.

Who reviews pre-settlement funding applications?

Once a plaintiff or their lawyer has submitted a pre-settlement funding application to the insurer – a team of underwriters will review the case and the possible outcomes thereof.

What determines the success of a pre-settlement loan?

Once the pre-settlement loan of funding has been submitted, a team of underwriters will review the case. In doing so, they will seek out:

The case: Whether the lawsuit involves personal injury to the plaintiff, a loan lawsuit, or where the plaintiff will receive cash compensation – underwriters will review the quality of the case and what the settlement will be for the plaintiff.
Lawyer/Attorney Experience: Underwriters will consider the experience of the lawyer/attorney who is handling the settlement negotiations on behalf of the plaintiff. Most insurers would consider more experienced lawyers as a positive take to the outcomes of the case.
The success of settlement: What will the success rate of the case be? This is to consider whether the plaintiff stands a good chance to receive the agreed settlement.

Pre-settlement funding will not impact the credit score of the plaintiff and is used to ensure a plaintiff can sustain themselves while awaiting the outcomes of their lawsuit.

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