How Legal Funding Works
An educational guide to lawsuit funding: what it is, how the process works, and what to know before applying.
Legal funding, also called pre-settlement funding, provides non-recourse funding for plaintiffs in active lawsuits. You apply, a funder reviews your case, and if approved you receive funds, typically within 24–48 hours. Because it's non-recourse, you only repay from your settlement if you win. If your case is lost, you owe nothing.
The instrument earned a hard reputation from compounding rates and buried fees, which is why ClaimAngel rebuilt it as Case Equity: one set rate, a hard cap, and no surprises at settlement.
The Funding Process
How plaintiffs typically get funded in the legal funding industry
Application
Plaintiff applies for funding while working with their attorney on an active case.
Case Review
Funding company reviews case merit, liability, and potential settlement value with attorney.
Funding Delivered
If approved, plaintiff receives funds, typically within 1-5 days.
Non-Recourse Protection
Legal funding is non-recourse, meaning plaintiffs only repay if they win their case. If the case is lost, no repayment is required.
Key Features of Legal Funding
What makes lawsuit funding different from traditional loans
Non-Recourse Protection
Lose your case? Keep the money. No personal liability, no impact on credit, no risk to your assets.
- Only repay if you win
- No credit check required
- Home and car are safe
No Monthly Payments
No bills during your case. One simple payment from your settlement when you win.
- No payment stress
- No income verification
- Focus on recovery
Understanding Costs
Lawsuit funding rates vary widely across the industry. Rates typically range from 27.8% to 200%+ APR.
- Ask about interest type (simple vs compound)
- Request total repayment amount
- Look for repayment caps
Attorney Involvement
Your attorney must be involved in any legal funding agreement to protect your interests.
- Attorney reviews all terms
- Repayment from settlement only
- Attorney approval required