If you retain an attorney to represent your personal injury claim, the attorney will work on a contingency basis. This means you pay no upfront costs for legal fees, paying instead when your settlement or award arrives.
While your lawyer will not provide funds for you in the form of a loan, they may be able to help in other ways.
Can you Borrow Money from Your Lawyer?
Generally, plaintiffs are not able to borrow money from their lawyer. Per the American Bar Association lawyers are prohibited from loaning money to clients. That said, your attorney is permitted to advance funds for deposition expenses, court fees, and other related costs in line with the contingency agreement.
You are not typically required to pay the lawyer unless you win a verdict or settlement. You may, though, still be held liable for court fees or other expenses related to your attorney’s billable hours.
One of the ethical dilemmas concerning borrowing money from an attorney is that loans to clients can become a conflict of interest for the lawyer. If you and your lawyer disagree about a potential settlement, for instance, this could impact repayment of the loan. So, the more distance clients and attorneys can put between monetary disputes, the better.
What this means, though, is that many victims in personal injury lawsuits find themselves under financial duress while waiting for a case to settle. Since this could take many months, what other options exist for funding when you need it most?
What is a lawsuit cash advance?
Each state has different legislation when it comes to lawyers providing funding for clients. While aiding with litigation fees is generally acceptable, aid to cover living expenses is entirely different.
That’s where lawsuit loans come in. In most states, a lawyer or law firm can allow a client to get a cash advance or lawsuit loan. You get the money you need now while your case battles on. There are many benefits to receiving legal funding.
How to Get Money Now on The Strength of a Lawsuit
If you are involved in a personal injury claim after an accident, two things likely happen:
1. You need time off work because of your injuries.
2. Bills start mounting for medical treatment, medications, and therapy.
Many plaintiffs find expenses piling up and income dropping while a settlement may take some time to resolve.
Pre-settlement funding, also known as a lawsuit loan, legal funding, or lawsuit cash advance is one possible solution. This is a non-recourse financial product, meaning there is no risk for the plaintiff obtaining funds.
Lawsuit loans are not traditional loans. Neither your credit score nor income are qualifying factors, and you will make no monthly payments.
Legal funding comes in the form of a cash advance but is not a traditional cash advance either. You will not need to give collateral, and you will not be responsible for repaying the cash advance unless you win your case. This will not impact your credit rating either.
With pre-settlement funding, the lending company purchases a percentage of your expected settlement – typically from 10% to a maximum of 20% of the anticipated value. If you win your case, you repay the principal in addition to an origination fee and interest. You pay the lender from your final settlement. If you do not win your case, you are not obliged to repay the cash advance.
How Much Can You Borrow with a Lawsuit Loan?
You will typically find legal funding companies offer you a cash advance of between 10% and 20% of the expected value of your settlement. As such, the higher your expected settlement, the more you could borrow.
The most sensible strategy with litigation financing, though, is to limit your borrowing to only what you need.
How Can You Use Funds from a Lawsuit Loan?
One of the key benefits of legal funding is the fact you can use the funds for any purpose.
Can my lawyer fund me in Alabama?
The Alabama Bar Association states that there are four situations in which an attorney can finance a client’s fees; both litigation and living expenses:
- A lawyer may advance litigation expenses and court fees then deduct them from your settlement amount.
- An attorney representing an impoverished client may pay for case costs.
- A lawyer may advance or guarantee emergency financial assistance to the client. This assistance can be used to cover living expenses.
Can I get money from my Alaska personal injury attorney?
According to the Alaska Bar Association, lawyers are strictly prohibited from granting loans to aid a client for living expenses in Alaska. However, a lawyer may aid in financing litigation:
- A lawyer may finance the litigation of a client who can’t pay for themselves.
- A lawyer may advance litigation fees.
Can my lawyer give me a lawsuit loan in California?
The State Bar of California prohibits a lawyer from lending to a client for personal or business expenses with some exceptions:
- Letters of protection or promises of payment to medical providers or other interested parties at the end of the claim.
- If the attorney employs the plaintiff, with the client’s written promise to repay the loan.
- Advancing litigation-related fees.
Can a lawyer give money to a client in Florida?
The Florida Bar finds it unacceptable for lawyers to fund a client’s living expenses. However, an attorney may aid in funding litigation for the following reasons:
- An advance on the costs of litigation; repayment based on the outcome of the case.
- A lawyer may finance litigation on behalf of a client.
Can an attorney give a client a lawsuit cash advance in Georgia?
According to the Georgia Bar, lawyers are prohibited from lending to clients unless the client meets one of the following criteria:
- A lawyer may advance court fees and expenses of litigation.
- A lawyer representing a client unable to pay expenses related to litigation may pay for the client.
Can I get money from my attorney in Indiana?
The Indiana Bar states that lawyers may not guarantee loans for clients as it relates to living expenses. However, a lawyer may help a client in terms of financing court expenses:
- Lawyers may advance the costs of litigation, which includes getting evidence and medical examination.
- Lawyers may cover the full costs of litigation on behalf of impoverished clients.
Can my lawyer cover my living expenses in New York?
As stated by the New York City Bar, there are three situations in which a lawyer may cover litigation costs and one in which a lawyer may assist with living fees:
- A lawyer may advance court fees.
- Attorneys can cover court fees for a pro-Bono case.
- A lawyer may personally finance a portion of litigation fees.
- Not-for-profit agencies may provide financial assistance to clients; including living expenses.
Interested in pre-settlement funding? Check out our New York state page for more information.
Can attorneys give clients money in New Jersey?
New Jersey rules of professional conduct state that a lawyer cannot cover any personal expenses of a client. However, there are four situations in which a lawyer may fund a client’s court fees:
- Advancing litigation fees.
- Lawyers representing clients unable to pay may cover their litigation costs.
- Pro-bono agencies and programs may fund clients unable to fund themselves.
Can my attorney give me a lawsuit loan in Louisiana?
The Louisiana Ethics and Opinion board states that a lawyer may grant funding for both living and litigation expenses under one of the following conditions:
- Attorneys can cover court costs and litigation expenses.
- A lawyer may fund clients in need, following strict regulations.
- Loans given by lawyers may not accrue interest.
Can I ask my attorney for a loan on my injury lawsuit in Ohio?
As stated by the Ohio supreme court, attorneys may not fund a client’s living expenses in any way. However, under certain conditions an attorney may cover court fees:
- Attorneys may advance litigation costs for clients.
- Attorneys may cover court and litigation-related fees for pro-bono cases.
Can my attorney give me lawsuit funding in Pennsylvania?
According to the Pennsylvania Disciplinary Board, under no circumstances can an attorney cover a client’s living expenses. There are two situations where an attorney may help with litigation fees:
- Attorneys may advance litigation fees for clients.
- Injury attorneys can cover any and all fees relating to the claim for pro-bono cases.
Can I get a loan from my Texas lawyer?
The Texas Center for Legal Ethics states that lawyers can provide financial assistance to clients for both living and court fees. There are two circumstances that allow for this:
- A lawyer may guarantee but not pay for claim-related fees and reasonably necessary medical bills and living expenses.
- A lawyer representing a client who is unable to pay may cover expenses of litigation on behalf of the client.
In need of a lawsuit loan in Texas? Check out our resource for Texas plaintiffs.
I can’t cover my living expenses during my lawsuit, can my attorney in Oregon help?
The Oregon Bar states that a lawyer can assist with litigation fees. However, attorneys cannot help their clients cover living expenses:
- If a client is unable to pay legal fees, the lawyer can cover them.
- A lawyer may pay for case expenses and collect repayment based on the outcome of the claim.
Can I borrow money from my lawyer in Washington?
The Washington Bar Association does not allow lawyers to cover living expenses. While a lawyer can make an advance on the claim there are regulations:
- A lawyer may guarantee the expenses of litigation, including medical expenses.
- For class action claims, repayment of expenses is based on the outcome of the matter.
Can my lawyer give me cash in Virginia?
In Virginia, a lawyer cannot pay for any living expenses as stated by the Virginia Bar Association. However, under certain circumstances a lawyer may aid in paying for court costs:
- A lawyer may advance court costs and take repayment from the settlement
- If a client cannot pay court costs themselves, an attorney may pay on behalf of the client
As you can see, some states are more lenient on loans from lawyers than others. Each state has its own Bar association that they use to outline its rules and regulations. Click here to learn more about lawsuit loans in your state.
Why Choose Uplift Legal Funding?
If you have explored other avenues of funding and you feel a lawsuit loan is right for you, here at Uplift Legal Funding we charge simple non-compounding interest. Most personal injury claims take months to settle so for many plaintiffs who take lawsuit loans with compounding interest, costs can start to spiral.
You can apply for a loan on the strength of your expected settlement online or over the phone. In the first instance, you need only supply the contact details of your legal counsel and the basic facts of your case.
We will then liaise with your attorney and promptly evaluate your case. Assuming you have a strong claim, we will send a funding contract to your attorney. Once you sign and return this agreement, you could have funds within as little as 24 hours, and you won’t need to ask your lawyer to lend you money either.