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Can I Get Pre-Settlement Funding Without My Attorney Consent?

Can I Get Pre-Settlement Funding Without My Attorney Consent?

Attorneys play an important role in the entire process of applying and obtaining pre-settlement funding. From legal representation and negotiation to case evaluation and expert guidance, your attorney’s involvement goes a long way in helping you get a pre-settlement loan while you wait for your settlement check. But what if your attorney does not support your application for legal funding?

Can you get pre-settlement funding without your attorney’s consent?

Theoretically, yes, it is possible. But in practical terms, no, you cannot. While you’re not necessarily obligated by law to have an attorney before you apply, the reality is that most reputable legal funding companies require direct communication with your attorney. So, you need to understand the role of your attorney in the lawsuit funding process and why you may need to seek their consent before signing the agreement.

At Stonewood Funding, our pre-settlement loans provide you with cash advance to ease your financial burden while you await your settlement. Our application process is very simple and easy in just 3 easy steps. Take a few minutes to apply online now and get the financial support you need.

In this blog, you’ll learn why it is necessary to involve an attorney, their role in the pre-settlement loan process, and common misconceptions to avoid.

What is Pre-Settlement Funding & How Does it Work?

What is Pre-Settlement Funding & How Does it Work?

Pre-settlement funding, also known as lawsuit funding or pre-settlement loans, is a financial option that provides plaintiffs with a cash advance against their settlement. Simply put, it’s a way for plaintiffs to access funds while they await the resolution of their case and their settlement check.

Some of the cases where pre-settlement funding is common include personal injury cases, product liability claims, car accident loans, wrongful death lawsuits, employment disputes,  and class action lawsuits.

How do pre-settlement loans work? Unlike traditional loans, lawsuit loans are non-recourse. This means that you repay the loan only if you win the case. As such, lawsuit loan companies consider it a high risk and as a result, they set a relatively high interest rate to compensate for the risk. Most lawsuit loan companies also strictly require the involvement of an attorney in the agreement to be sure their interest is legally protected.

For a personal injury claim, the pre-settlement lawsuit loan process follows a predictable sequence. To begin the process, plaintiffs need to apply with a pre-settlement lawsuit funding company. The application typically requires information about the lawsuit, including the type of case, the expected settlement amount, and the plaintiff’s attorney’s contact information.

The legal funding company will evaluate the application and assess the risks involved. If they approve the application, the plaintiff receives the pre-settlement funds typically within a few days of approval.

Once the legal case is resolved, either through a settlement or a court judgment, the plaintiff’s attorney will deduct the agreed-upon portion of the settlement to repay the lawsuit loan company. Any remaining funds belong to the plaintiff to cover medical expenses, legal fees, or other needs. 

How Long Does It Takes To Receive Pre-settlement Funding

The timeline for receiving pre-settlement funding varies depending on factors such as the complexity of the case, the lending company’s processes, and how quickly your lawyer can provide the necessary information. Generally, once you apply for pre-settlement funding and your case is approved, the funding can be disbursed relatively quickly. Many lenders aim to provide funding within 24 to 48 hours after approval. At Stonewood Funding, you can even get the lawsuit cash advance within 24 hours if you qualify for our same-day pre-settlement loans.

Can You Get Pre-Settlement Funding Without Your Attorney’s Consent

Can You Get Pre-Settlement Funding Without Your Attorney's Consent

Yes, you can get pre-settlement funding without your attorney’s direct consent. However, it’s highly unlikely for a reputable lawsuit funding company to provide financing to a plaintiff without the involvement of an attorney. Most reputable pre-settlement funding companies will require some form of communication with your attorney for several reasons.

First, your attorney should have most details about your case, including its strength, the expected settlement amount, and the timeline. Funding companies rely on this information to assess the risk and decide whether to approve your funding request.

Secondly, there are legal and ethical standards that may regulate pre-settlement funding in your jurisdiction. Engaging with your attorney helps ensure that these standards are met, protecting all parties involved.

Also, pre-settlement loans are typically repaid directly from the settlement or judgment amount. This means the funding company will have a vested interest in how the settlement is structured and will often require an agreement that includes your attorney to ensure they get their repayment.

How to Approach Pre-Settlement Funding Without an Attorney

How to Approach Pre-Settlement Funding Without an Attorney

If you are pursuing pre-settlement funding independently without an attorney, consider these steps carefully to achieve a successful process and approval from the funding company:

1. Research Legal Funding Companies 

Begin by researching reputable pre-settlement loan companies. Choose a company with a solid reputation, experience in the industry, and a proven track record of success. Ensure that the legal funding company operates transparently and provides clear information about its fees, terms, and processes. Also, assess the company’s customer service and responsiveness. Choose a funding company that offers flexible terms and customizable solutions to accommodate your unique circumstances.

2. Gather Detailed Information About Your Case

Without an attorney, you will need to provide detailed information about your case to the legal funding company. Different funding companies may specialize in certain types of cases (e.g., personal injury, car accident, etc.). Ensure your case fits their criteria. Also, gather all relevant documents and evidence that prove the merits of your case, such as police reports, medical records, and any correspondence related to the case.

3. Compare Offers

If possible, get offers from multiple funding companies to compare terms. Pay attention to details such as interest rates, repayment terms, fees, and the non-recourse clause. Be aware of any fees associated with the funding, such as application fees, processing fees, or origination fees. Compare rates from different companies to ensure you’re getting a competitive offer. This will allow you to make an informed decision and choose the option that best meets your needs.

4. Review Terms and Conditions

When you settle for a legal funding company, carefully review the terms and conditions of the funding agreement they provide. Review the repayment terms, including the timeline for repayment and any penalties for late repayment. Look out for any hidden fees or clauses that could impact you negatively. Ensure that the funding agreement includes a non-recourse clause, which means you’re only obligated to repay the funding if you win your case.

5. Seek Legal Advice

Even if you do not have an attorney representing you, it’s still advisable to seek legal advice before proceeding with pre-settlement funding. A consultation with a legal expert can help you understand your rights and ensure that you get a fair settlement in the end.

6. Proceed with Caution 

Remember, while pre-settlement funding can provide immediate financial relief, it is a complex and potentially costly decision, especially without the guidance of an attorney. Make sure you fully understand the terms and are comfortable with the risks involved. Take the time to thoroughly understand the terms and implications of the agreement before signing.

The Role of Attorney in Pre-Settlement Funding

The Role of Attorney in Pre-Settlement Funding

According to a report by the American Bar Association, 63% of the people who lacked legal representation lost their cases while about 94% of the people who won their cases were legally represented. From this report, it’s apparent that attorneys contribute largely to the success of legal processes, including procedures that require negotiations and agreements, such as obtaining lawsuit loans.

Attorneys play a key part in ensuring that you understand the terms of the funding, the implications for your case, and whether such funding is in your best interest. Here are the primary roles an attorney plays in the pre-settlement funding process.

1. Assessment and Advice

Attorneys help evaluate whether pre-settlement funding is necessary and in your best interest, considering the uniqueness of your case and your financial situation. They also help you understand the terms of the funding agreement, including fees, interest rates, and repayment conditions, to ensure they are fair and reasonable.

2. Case Evaluation 

They review the details of the case, including evidence, witness statements, and legal precedents, to determine its strength and likelihood of achieving a favorable outcome. This evaluation is instrumental in securing pre-settlement funding and negotiating favorable terms with your pre-settlement funding company.

3. Negotiation

Attorneys can negotiate the terms of the funding to secure the most favorable conditions for their clients. This includes lower interest rates and fees. They ensure that the pre-settlement funding agreement does not include any terms that could adversely affect your interests or the outcome of the case.

4. Ensuring Legal Compliance

An experienced attorney ensures that the lawsuit funding company agreement complies with applicable laws and regulations. They make sure the agreement adheres to ethical standards, protecting the client from potentially predatory lending practices

5. Coordination and Repayment

Attorneys often act as the intermediary between the client and the funding company to facilitate communication and the transfer of documents. They are typically responsible for repaying the funding company from the settlement amount before disbursing the remainder to the client. They also make sure that the repayment amount is calculated correctly according to the agreed-upon terms.

Alternatives to Pre-Settlement Funding Without Attorney Consent

Alternatives to Pre-Settlement Funding Without Attorney Consent

If you’re unable or unwilling to obtain pre-settlement funding without your attorney’s consent, several alternative funding options are available:

  • Personal Savings: Using personal savings can be the most straightforward and cost-effective way to manage expenses during a lawsuit. It helps you avoid the need for repayment and interest charges associated with loans.
  • Personal Loans: You may consider applying for a personal loan from a bank, credit union, or online lender. Personal loans typically have fixed interest rates and repayment terms, allowing you to borrow funds for various purposes, including covering expenses during a legal dispute.
  • Credit Cards: For short-term financial needs, credit cards can be a viable option. If you have a credit card with a low-interest rate or a 0% APR introductory offer, it could be a cost-effective way to cover expenses. However, high-interest rates can make this a costly option in the long run.
  • Borrowing from Friends or Family: If feasible, you could borrow money from friends or family members to cover expenses during your legal case. Be sure to formalize the arrangement and establish clear repayment terms to avoid misunderstandings.
  • Community Assistance Programs and Charities: Some non-profit organizations, community assistance programs, and charities offer financial aid to individuals in need, especially those facing medical bills or living expenses due to injury or disability.

Do Lawyers Give Advances on Settlements?

Generally, attorneys are prohibited from providing cash advances to their clients from expected settlements. The goal is to maintain the integrity of the attorney-client relationship and to prevent conflicts of interest.

At the federal level, Rule 1.8(e) of the Model Rules of Professional Conduct of the American Bar Association (ABA) states that a lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation. However, in some cases, a lawyer representing a needy client may pay court costs and expenses of litigation on behalf of the client.

In California, Rule 1.8.1 of the California Rules of Professional Conduct, which corresponds to the ABA Model Rule 1.8(e)), specifies that a lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation.

Exceptions and Clarifications

While lawyers in California are prohibited from offering advances on settlements to their clients, they can advance or cover costs and expenses related to the litigation process itself. This clarity is crucial because it allows clients who might not otherwise afford to pursue legal action the ability to do so, with the understanding that these costs and expenses will be recovered as part of any settlement or judgment in their favor.

Top 7 Common Misconceptions About Pre-Settlement Funding for Plaintiffs and Collateral

Top 7 Common Misconceptions About Pre-Settlement Funding for Plaintiffs and Collateral

Despite the benefits and accessibility of pre-settlement funding for plaintiffs, there are several misconceptions surrounding the process and the need for collateral. Understanding these misconceptions can help plaintiffs make informed decisions about whether to pursue such funding. Let’s explore some of these misconceptions:

  1. Pre-Settlement Funding is Like a Traditional Loan: No, this is not true. Pre-settlement funding is not a loan in the traditional sense. It’s a non-recourse advance, meaning you don’t have to repay if you don’t win
  2. Everyone Qualifies: Not all individuals or cases qualify for pre-settlement funding. Lawsuit funding companies typically evaluate the strength of the case, potential settlement amount, and the likelihood of a successful outcome before offering pre-settlement loans.
  3. There’s No Risk Involved: While pre-settlement funding doesn’t require repayment if you lose your case, there are still risks, particularly related to the cost. Interest rates and fees can be high, significantly reducing the amount you receive from a settlement.
  4. Interest Rates Are Standard: Interest rates and fees for pre-settlement funding can vary widely between companies. They are often higher than traditional loans due to the risk the funding companies take. Rates can be compounded monthly, leading to a high repayment amount.
  5. The Attorney Handles Everything: While your attorney plays a crucial role in providing information to the funding company and must agree to the funding due to their involvement in the repayment process, as a plaintiff, you must actively apply for the funding and make the final decision. Some attorneys may have reservations about pre-settlement funding due to its potential complications.
  6. Collateral Is Required: Pre-settlement funding does not require physical collateral like a mortgage or car loan. The funding is secured against the potential future settlement or judgment award from the lawsuit.
  7. Funds Can Be Used for Anything: While there are no strict restrictions on how you can use the funds, it’s advisable to use them for necessities and expenses related to living costs or the lawsuit. Misusing the funds can lead to financial strain, especially if the settlement is less than anticipated.

Apply for Pre-Settlement Funding Today

If you’re seeking pre-settlement funding in California, it’s essential to work with a reputable pre-settlement funding company. At Stood Wood Funding, our loans are risk-free, there are no application fees, and if you do not win your case, you won’t owe us anything. Apply online today or reach out to us – let’s discuss your settlement funding needs and get you started.

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