Legal Funding vs. Structured Settlements

Analyzing Legal Funding and Structured Settlements

First, let’s go over the basics of each of these financial instruments:

Legal funding is money provided by a funding company prior to the settlement of a lawsuit. This can prove useful for those who are struggling financially during their case. After the lawsuit’s resolution, if the plaintiff wins, they repay the advanced funds. If not, they owe nothing.

On the other hand, a structured settlement is an agreement in which the defendant (or their insurer) agrees to pay the plaintiff a certain amount of money over a specified time period instead of all at once. It offers a steady stream of income but lacks the nearly immediate access to funds that legal funding provides.

Legal Funding – Pre- and Post-Settlement Funding

The legal funding industry has many facets, but one of the great divides is pre- and post-settlement funding. Pre-settlement funding often involves more risk for the funding company, and thus justifies higher fees and rates.

Pre-Settlement Funding

Pre-settlement funding offers a cash-upfront solution to the long personal injury legal process. Personal injury cases can take months or sometimes years to settle. Pre-settlement advances are often provided during ongoing litigation. Plaintiffs can use legal case funding for living or medical expenses, allowing them to pursue higher settlement values. Like personal injury attorneys, pre-settlement funding companies offer a no-win, no-pay promise. If the plaintiff does win, the lender takes a portion of the settlement along with interest.

To qualify for a pre-settlement advance, the plaintiff must be 18 or older, show some form of injury, and have an attorney currently working on their claim. Funding is provided for injuries such as spine and back injuries, birth injuries, amputations, bone fractures, muscle tears, and burns, as well as for loss of consortium, lost wages, or any other injury that requires treatment.

Post-Settlement Funding

Settlement funding still comes before settlement disbursal, but after the case concludes. Even if a plaintiff has won, payment and collection of damages often take months. Because of this, post-settlement funding helps bridge the gap between settlement and payout. The purpose of a settlement advance is similar to that of a pre-settlement advance, only settlement advances tend to have lower rates because the plaintiff’s winnings are considered 100% certain.

Structured Settlements

Unlike pre-settlement or post-settlement funding, a structured settlement refers to a plaintiff forgoing a lump sum and opting to receive smaller periodic payments on an agreed schedule.

Structured settlements must be agreed to by both parties. In contrast to legal funding, structured settlements offer a premium on your lump sum settlement proceeds. Structured settlements have tax advantages in certain cases and can be useful for plaintiffs who are not financially savvy.

Uplift Legal Funding

It is essential to seek professional legal help when filing a claim. If a lawyer is working on your case and you need cash upfront, Uplift Legal Funding can assist you. To learn more about how legal funding works, take a look at our guide to legal funding.

To get help as soon as today, apply online or give us a call at (800) 385-3660.