• How is consumer legal funding different from a loan?

    Pre-settlement advances differ from loans in several key respects. After retaining an attorney and filing a claim, a victim can apply for consumer legal funding. If approved, they will receive a cash advance, that, unlike a loan:

    • Doesn’t require repayment if the case does not result in a monetary award
    • Doesn’t require collateral
    • Doesn’t impact a consumer’s credit
  • How does consumer legal funding serve consumers?

    Victims with legal claims often find themselves under significant financial pressure while they pursue a fair settlement. In some instances, they have been injured and are unable to work. Consumer legal funding gives them access to cash for personal, non-legal expenses during the sometimes-long pendency of their case. For example, advances can be used for:

    • Groceries
    • Medical bills
    • Rent
    • Car payments
    • Student loans

    With the resources to meet these immediate financial needs, victims don’t have to agree to low settlement offers.

  • Who is eligible for a cash advance, and what is the process?

    Victims of accidents with credible personal injury claims can apply for consumer legal funding to help make ends meet. A victim must have retained legal counsel and must have officially filed their case prior to applying for consumer legal funding. Additionally, consumers must go through a robust underwriting process to qualify for a pre-settlement cash advance.

  • Is consumer legal funding regulated?

    Four states—Oklahoma, Vermont, Indiana, and Tennessee—have formal legislation specifically regulating the consumer legal funding sector. These states:

    • Set forth strict licensing requirements, including review of character and fitness of funders and posting of bond
    • Require funders to provide clear contracts in the consumer’s first language, explaining exactly what they owe
    • Prohibit the use of cash advances for legal fees
    • Bar funders from participating in cases
    • Mandate a five-day cancellation window
    • Requires annual, public reporting of all transactions, including interest rates
    • Offer public complaint portals

    ALFA also requires all members to abide by the ALFA Code of Conduct, which supports best practices and requires funders to abide by the highest ethical standards in legal funding.