Sustaining injuries from an accident is devastating — physically, financially, and emotionally. The impact of an accident often results in severe repercussions that the injured individual must overcome. Expensive medical treatments, surgeries, and ambulatory services lead to skyrocketing medical costs, and being unable to work can worsen matters, leaving you unable to pay living expenses.
If you are pursuing a lawsuit for your personal injury case, you may consider asking your attorney for help. After all, they have decided to fight for you on a contingency fee basis — can they lend you money to get by in the meantime?
The answer is a resounding no.
All attorneys must abide by a code of ethics. This prevents them from providing loans to their clients. While they may accept a case on a contingency fee basis, they cannot give you a loan based on their expectations of the outcome.
However, they can help you obtain pre-settlement funding through a lawsuit loan company like Stonewood Funding.
Can I Borrow Money from My Lawyer?
The American Bar Association prohibits attorneys from providing loans or financial assistance to their clients under the Model Rules of Professional Conduct. Specifically, rule 1.8(e) provides that:
“A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation.”
If a lawyer disobeys the rule, they may be fined, suspended from practicing law, or even disbarred. Thus, if you ask your lawyer for a loan, be prepared for an unequivocal “No.”
However, they can advise you on getting money before your settlement, like seeking a lawsuit loan from Stonewood Funding.
Pre-settlement loans are tremendously helpful to those involved in a personal injury lawsuit. They provide you with a fraction of your expected settlement well in advance of the outcome of your case. You can use the cash advance for essential expenses, like paying medical bills or meeting your monthly rent, grocery costs, or other living expenses.
Why Your Lawyer Can’t Give You an Advance on Your Settlement
There are several reasons your attorney can’t provide you with a loan. Let’s consider them.
American Bar Association Prevents Lawyers from Lending Money to Clients
The main reason attorneys can’t provide you with financial assistance is that the ABA’s Model Rules of Professional Conduct prevent them from doing so.
Consider a hypothetical example. If your livelihood depends on following specific standards, you will probably follow them. You don’t want to risk losing your ability to work by breaking a rule. Your attorney feels the same way.
While the ABA prevents attorneys from lending you money for your medical bills and living expenses, attorneys can use their law firms’ money to pay for upfront litigation expenses related to your case.
For example, litigation financing costs associated with expert testimony, deposition expenses, gathering evidence, medical examinations, and court fees are all fair game.
Your lawyer likely feels sympathetic if they know you are financially struggling while waiting for your personal injury lawsuit to resolve.
However, there is little they can do except recommend that you seek pre-settlement lawsuit loans, traditional loans, or help from family members and friends.
Conflict of Interest
A conflict of interest would arise if a lawyer provided you with a loan. Essentially, they would be gambling that their legal strategy would result in a settlement to you. Thus, not only would they have a time investment in securing a settlement, but they’d also have a financial incentive to do so.
If the lawyer lost their case, they’d lose their financial investment. Thus, lawyers should manage potential conflicts by avoiding financial enmeshment with their clients.
For example, consider a lawyer who obliges their client who needs a cash advance. They offer the client $20,000 with a 90% APR. The case settles after three years for $125,000.
The attorney has charged a contingency fee for their services of 30%. Additional legal costs incurred during litigation are $5,000. Thus, the client will owe their attorney:
- $37,500 for legal services
- $5,000 for other legal costs
- $20,000 for the principal of the loan
- $54,000 in interest
The total paid to the lawyer is $116,500, leaving the client with $8,500 from a $125,000 settlement. The lawyer will obtain almost all of the money from their winning lawsuit, less a small $8,500 balance and the $20,000 for the initial loan.
No one wants to go through years of litigation and see such a small sum for their efforts.
How Can I Get Money from My Settlement Early?
The best way to obtain money from your pending settlement early is to apply for pre-settlement funding.
Pre-settlement funding involves working with a lawsuit loan company to get the cash you need. There are no credit checks, and you don’t need to be currently working to qualify for a loan. You qualify for lawsuit funding if you have an open legal claim and are working with legal counsel to obtain a settlement award or court verdict.
Pre-settlement loans help plaintiffs obtain the money they need to pay medical bills, rent, groceries, and other expenses. Lawsuit loans tide you over while you wait for your settlement, allowing you to recover from your injuries without financial strain.
Unlike traditional loans, you don’t need to make monthly payments on your loan while your case is pending. Instead, your lawyer repays the balance of your loan with money from your award once your lawsuit settles.
Of course, not every lawsuit ends favorably for plaintiffs. Circumstances may arise that result in your case being dismissed or thrown out.
If your lawyer fails to win a settlement or court verdict in your favor, you will not need to repay your lawsuit loan. Your pre-settlement funding company assumes your case’s risk and will close your account without pursuing you for the balance of your loan or interest incurred.
To apply for pre-settlement advances, you do not need to pledge collateral. You don’t have to worry about losing your home or other assets if your lawsuit doesn’t result in a future settlement. A lawsuit loan company determines whether you qualify for a loan by the facts and circumstances of your case — not your personal financial situation.
The Benefits of Lawsuit Funding
There are several benefits to obtaining advances in settlements through legal funding.
Get Your Money Quickly
You can obtain a lawsuit loan quickly and conveniently — sometimes within the same day of your application!
Once you apply and provide the necessary documentation concerning your case, the litigation funding company will begin its review. Your personal injury attorney will need to provide information concerning your case, such as their expectations for settlement and specific evidence or documentation.
When all information is received, the legal funding company will perform a review and determine whether you are eligible for a lawsuit loan. Once you and your lawyer sign the lending agreement, the company will deposit the money directly into your bank account.
Lawsuit loans are forms of non-recourse lending. Under a non-recourse loan agreement, the borrower is not responsible for repaying the loan if the lawsuit is unsuccessful. The pre-settlement funding company retains responsibility for the loan and must walk away if your attorney fails to win a settlement or court verdict.
Lawsuit loans do not require any collateral, and you are not required to make monthly payments toward them. The balance of the loan and any interest incurred is paid directly from your settlement funds.
While the interest rates for pre-settlement loans are higher than traditional bank loans, you don’t need to worry about paying a pre-settlement loan back if your case fails.
Since resolving personal injury lawsuits may take a while, the convenience of having a fraction of your expected settlement funds early often reduces the stress plaintiffs are facing. Instead of worrying about making rent payments or buying food, they can concentrate on recovering from their injuries.
Easy Application Process
Applying for lawsuit loans is simple. You fill out an application or speak with a loan specialist over the phone. After explaining the essential circumstances of your case, the loan specialist will request to talk with your personal injury attorney.
Once your attorney provides the lawsuit loan company with the information they need, the underwriter will review your application. If the loan underwriter approves your application, you will receive a contract indicating the loan amount and its terms.
When you return your signed contract, the lawsuit company disburses the money into your bank account. Oftentimes, payment occurs on the same business day of contract receipt.
How to Get a Loan on Your Settlement
If you’re wondering how you’ll cover your upcoming expenses while waiting for your lawsuit to conclude, pre-settlement funding should be high on your list of alternatives. Lawsuit loans are highly beneficial to individuals involved in personal injury cases who need some financial assistance.
Stonewood Funding has an easy-to-follow, three-step process that can get you the money you need quickly and efficiently.
Step 1: Apply for Pre-Settlement Funding
Our initial application is very straightforward. You’ll provide your name, the basic details of your case, and your lawyer’s contact information. When you speak to our friendly loan specialists on the phone, feel free to ask any questions you have about our lending process.
Our loan specialists need to speak with your attorney to get your litigation funding started. Often this is the slowest part of the application process since attorneys have numerous matters they are working on concurrently.
To expedite your cash advance, reach out to your law firm and let them know you have applied for pre-settlement funding with Stonewood Funding.
Ask your attorney to contact us at a time that is convenient for them. Since the ball is now in their court, they can reach out when they are not meeting with clients. You don’t have to worry about them missing an important call from us.
When we speak with your attorney, we will ask them to validate the information concerning your case. Our loan specialists will ask for details concerning your personal injury lawsuit, like expectations for settlement and the timeline for resolution. Once we have all of the details, we’ll forward them to our underwriting team for review.
Step 2: We Review Your Case
Our underwriting team is responsible for reviewing applications to determine whether they qualify for a pre-settlement cash advance. If the facts of your case support a lawsuit loan, we’ll provide you with a loan agreement.
The loan agreement contains the terms and conditions of your loan and the amount we can offer you. Stonewood Funding provides lawsuit loans from $1,500 to $250,000. Our underwriting team will determine your loan amount based on your case’s facts.
Once you and your attorney have reviewed the agreement, you will return it to Stonewood Funding for further processing.
Step 3: You Get Funding
Once we have processed your agreement, we’ll deposit your loan into your bank account. We frequently transfer money on the same day we receive your signed contract. If you miss the deadline for money transfer (noon PST), Stonewood Funding sends your cash advance the following business day.
Our pre-settlement funding application process is simple and fast. We want to be there to support you during what is likely a very financially tough time for you and your family. Stonewood Funding has helped thousands of people get the money they need to live on while awaiting resolution to a personal injury lawsuit.
Ready to Get Started on Your Pre-Settlement Funding Loan?
Stonewood Funding is available to help you obtain advance funds for your pending settlement or court verdict. Our services include pre-settlement and post-settlement funding for various cases, including personal injury lawsuits and car accident loans.
Contact us today if you don’t have the luxury of waiting for money from a case settlement or court verdict. Our loan specialists are ready to help you!