Pre Settlement Funding (pre-settlement loan or lawsuit loan) is used to define the type of funding intended to provide funds to the plaintiff in a lawsuit, before the case is finally resolved by a court decision or settlement. This funding helps plaintiffs who have immediate needs, such as medical care, secure financial help before the legal proceeding has run its course, often a matter of several years. The funding may free the plaintiff's lawyer to reject an inadequate early offer and wait for a more attractive resolution. This money is an advance on the value of the recovery in a lawsuit, made to qualifying plaintiffs', on a non recourse basis meaning that the borrower owes no money if the plaintiff loses his or her suit. In exchange for accepting the risk of non-payment, (A verdict for the defense,) the funding company requires charging a higher interest rate than would be charged for a conventional loan. Most companies providing Pre-settlement funding offer fast turnaround times and cash in hand within 24–48 hours (with repayment terms that include an interest in the proceeds or your case or the equivalent of staggeringly high interest rates, often compounded monthly)
The most common cases that qualify for pre-settlement funding are related to Workers Compensation, Medical Malpractice, Sexual Harassment, Wrongful Termination Personal Injury and a few other areas.
Some consider it unethical to take a percentage of the value of the case and limit their recovery to the agreed repayment of principal plus accrued interest.