Perhaps you’re mired in a legal battle due to a malfunctioning brake on your brand-new car. Maybe you’ve been fired for what you feel are unfair reasons, or a physician left a surgical tool inside you, causing protracted pain and suffering. Whatever the situation, the bills keep piling up, along with your anxiety.

In the past 20 years, litigation funding has helped even the legal playing field for many consumers in similar situations.

Initially, litigation funding came from investors backing law firms for large businesses. Litigation funding helped lawyers cover ongoing expenses during protracted, big commercial lawsuits. Litigation funding is now accessible for smaller consumer lawsuits such as:

  • Personal injury.
  • Car accidents.
  • Medical malpractice.
  • Defective medical devices, pharmaceuticals or other products.
  • Employment discrimination, whistle-blowers and labor law.

Litigation enables better access to justice and has provided necessary funding sources during the recent economic downturn, according to a 2021 Bloomberg Law survey of funders and lawyers using litigation funding.

What’s a lawsuit loan?

A lawsuit loan doesn’t resemble a traditional bank loan despite the name. Instead, the funding company advances a sum to purchase a portion of any legal awards, much like a stock market share. These may also be called a “lawsuit cash advance” or “presettlement funding.”

“The funder is purchasing a small portion of the expected settlement award,” says Bradley Braun, director of technology at Tribeca Lawsuit Loans, a leading consumer and commercial funder. “If the seller, aka plaintiff, loses the case, they owe nothing.”


The funding company is a passive partner and doesn’t control or influence attorney-client discussions or settlement decisions on a case. Depending on the funding partner, loans can be used for attorney fees and help keep business doors open or other legal costs as the lawsuit proceeds.

While some consumer lawsuit awards reach the stratosphere, the average personal injury case settles for less than $100,000. The average lawsuit loan is $10,000 or less, or about 10% of the case’s value. The company profits from the final settlement through various, previously agreed-upon means, including fixed-fee, monthly interest or another case-dependent type.

Most consumer lawsuit loans are “non-recourse,” which means the investment’s profit results from the case’s proceeds. If the customer loses the case, the funding company can’t ask the customer to repay the advance or lawsuit loan. 

To qualify for litigation financing, consumers must have a lawsuit pending. Consumers may hear of litigation funders through search engines, TV commercials or other advertising. Often, plaintiffs contact the funder directly to ask whether their case might appeal.

The person on the other end gathers the plaintiff’s contact information, description of the case and the attorney’s name. The 1-800 company may be a direct funder, a litigation finance broker or a combination of the two. Both offer more choice and healthy competition in the marketplace.

Direct funding lawsuit loans

Whether using its funds or relying on its investors, the litigation funding company is a direct funder. Direct funders control the capital and work directly with customers and attorneys to evaluate cases and close loans. 

A direct funder’s staff contacts the applicant’s attorney to gather documentation and learn about your case. The funder’s underwriters recommend a loan amount after assessing the case, and not all cases are accepted for funding. If the applicant agrees, the funder draws up paperwork regarding fees and rates. The parties execute the agreement, and the funder transfers the money to its new client.

The process can take as little as 24 to 48 hours to fund well-documented, straightforward personal injury cases, although complicated cases and higher dollar amounts take a bit longer. The direct funder works directly with the consumer and can quickly approve funding decisions after gathering enough information to evaluate the case.

Lawsuit loans and brokers

While common for decades in the commercial lawsuit funding sphere, litigation finance brokers are increasingly involved in consumer suits. These brokers bring litigation funding companies together with qualified, pre-vetted plaintiffs, defendants and law firm candidates. These funding companies are willing to put up the big bucks necessary to finance high-stakes litigation.

Because brokers aren’t well-known, consumers are referred to brokers by their attorneys and sometimes even by health care workers. Brokers quickly collect quotes for the consumer to choose from. After e-signing an agreement, funds can be sent electronically. The whole process can take as little as 24 hours.

 “Brokers bring us somewhere between 10% to 15% of our business,” says Rory Donadio, CEO of Tribeca Lawsuit Loans.

The broker’s value to the consumer lies in real-world connections, with faster access to more funding companies than the average consumer could find through dialing multiple investment firms. Great brokers develop relationships with litigation funding companies to determine their preferences for specific U.S. states and types of cases. For the consumer, brokers can sleuth out the lowest-fee companies with generous underwriting terms.

Brokers charge an average of 15%, a little more than a real estate broker’s charge. The investor pays this fee after the seller receives their money.

As circumstances demand, companies such as Tribeca Lawsuit Loans act as direct lenders and brokers. When a transaction promises to be large or involves a case not usually funded, Tribeca searches for an investor able to on the responsibility or willing to enter a joint venture.

Litigation loan caveats

It can be challenging for the average consumer to recognize whether they’re working with a direct funder or a broker. Right now, few legislatures have attempted to regulate direct funding companies, and no state requires licensing or registering as a litigation funding broker. Direct funders and brokers don’t have a duty to disclose their roles to consumers.

“Some consumers may not discover that they’ve been working with a broker rather than a direct funder until signing papers,” Donadio says.

This model differs significantly from other consumer-interfacing brokers. An insurance broker owes allegiance to the insurance buyer versus the insurance company, while the stockbroker owes a duty to its customer. Real estate broker roles are contractually spelled out regarding buyer or seller relationships when homes are bought and sold.

This can lead to concerns about the broker’s fiduciary duty — the legal requirement to act in the beneficiary’s best interests. It’s not always clear whether the litigation loan broker’s beneficiary is the consumer or the funding company (or investor).

When considering a company offering a litigation loan, ask if the company will act as a broker or direct funder and vet the company online. Whether the company proposes an interest rate or fee-based structure, ask for a quote including all fees. Ask whether interest is compounded (charged interest monthly on the total amount due). As well, ensure the litigation funder works on your behalf and not anyone else’s.

Litigation funding evens the playing field for the average consumer. Increasing the chance of a fair fight is critical, whether battling a well-resourced insurance company, business or industry. 

“Presettlement funding allows the litigant the financial staying power,” says Adrienne Tabag, Tribeca Lawsuit Loans creative director. As a result, consumers can “see their case to completion with more freedom and less pressure to have to settle their case for less than what it is worth.”

Tribeca Lawsuit Loans is a presettlement legal funding company that provides funds to individuals as well as law firms. If you are involved in a lawsuit and are facing financial difficulties, we can help you get the compensation you deserve.