What It Is
Pre-settlement funding is a non-recourse advance to a plaintiff whose legal claim is still pending, most often a personal injury case. The advance is repaid from the settlement or award. If the plaintiff recovers nothing, the plaintiff generally owes nothing.
The funder generally takes no part in the case: decisions about how it is run and whether to settle stay with the plaintiff and the plaintiff’s attorney. Pre-settlement funding is distinct from commercial litigation finance, which provides capital to law firms or businesses to pursue claims.
Why It Is Complex
Each advance is a claim on an uncertain outcome at an uncertain date.
- Repayment depends on the result of the case and on when it resolves.
- Cases can take years, and settlement values are not known in advance.
- Rules on disclosure, pricing, and contract terms differ from state to state.
- Courts continue to test how these contracts are characterized and priced.
- Each claim has its own facts, counsel, and timing, so each advance must be followed on its own.
Northway’s Role
Northway’s focus in this area is capital for companies that make pre-settlement advances to plaintiffs. Northway does not provide advances to individual plaintiffs.
Inquiries
Companies in the pre-settlement funding sector can reach Northway through the inquiry form.