Understanding Up Front Lawsuit Funding Fees

If you’re researching lawsuit loans to cover expenses while waiting for your case to settle, you may have come across the term “up front lawsuit funding fees.” In this post, we examine the use of these fees and hopefully gain a better understanding of their place in the legal landscape.

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Lawsuit Funding Basics

Lawsuit funding, also known as lawsuit loans or pre-settlement funding, are specialty financial transactions with advance cash to plaintiffs involved in pending litigation. Although referred to as lawsuit loans, these deals are actually a sale of the potential future recovery in a case. Thus, they are not loans in the traditional sense. One major difference is that repayment only occurs if the case is successful. If the case is lost, no repayment is due.

Settlement loans are most commonly used in personal injury cases, including automobile accidents, medical malpractice, and premises liability cases. They provide financial relief to plaintiffs who need money for daily expenses, medical bills, or other urgent costs while their legal cases progress.

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What Are Up Front Lawsuit Funding Fees?

Up front lawsuit funding fees refer to the charges some lawsuit funding companies require borrowers to pay before receiving an advance on their expected settlement. These fees may cover administrative costs, application processing, or other services provided by the lender. While most reputable lawsuit funding companies DO NOT charge these fees, it’s important to clarify this when discussing terms with a lawsuit lender.

Common Types of Up Front Fees in Lawsuit Funding

The most common types of up front fees in lawsuit funding are:

• Application Fees – Some lenders charge a non-refundable fee for processing your application and evaluating the merits of your case.
• Origination Fees -This fee is a percentage of the funded amount, meant to cover the cost of finding the investment. Origination fees are sometimes payments to lawsuit loan brokers for their services.
• Administrative Fees – These cover the cost of setting up your funding agreement and managing documentation.

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Up Front Lawsuit Funding Fees Are Not Common Practice?

Many reputable lawsuit funding companies do not charge up front fees. Instead, they structure their costs as a portion of the settlement amount, payable only if you win your case. This type of arrangement—called “non-recourse funding”—is often more borrower-friendly, as it eliminates financial risk if your lawsuit is unsuccessful.

When comparing funding options, look for transparency in the fee structure and avoid companies with hidden or vague charges. Reputable lenders are upfront about their costs and typically don’t require payment until your case is resolved.

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Avoiding Up Front Lawsuit Funding Fees

Here are some tips to avoid up front fees when exploring lawsuit funding options:

Search for Well Established Funders

Although lawsuit funding appeared in the legal landscape fairly recently (20 years or so), the business has evolved enough for industry leaders to adopt lawsuit loan best practices. These are designed to take the mystery out of the lawsuit loan process and offer transparency in the transaction.

Research Reputable Companies

Look for companies with lawsuit loan reviews and a clear fee structure. You can also ask your lawyer to recommend a company. Most plaintiff firms have funders they feel comfortable with. Attorneys who have a good working relationship with a lawsuit funder benefit both attorneys and clients.

Ask Questions

Before signing an agreement, ask about any up front lawsuit funding fees and whether they are mandatory. Reputable companies will not shy away from this information. If they do, it is possible they are not offering the best deal.

Read the Fine Print

Once a contract is prepared and forwarded for execution, carefully review the terms and conditions to ensure you understand the full cost of borrowing. A funder which requests up front payment of application, processing or other fees will likely have those conditions on the contract at the time of closing.

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The Bottom Line

While most fundable lawsuits are similar, some are simply outside the box of your typical personal injury case. In these instances, up front lawsuit funding fees might be appropriate. However, in the overwhelming majority of scenarios, these fees are not part of the industry’s best practices. Clearly, it’s better to work with a lender that doesn’t require up front fees and only collects payment when your case is successful. After all, being short of cash is the very reason you seek lawsuit funding in the first place. Requiring up front fees creates an often necessary burden added to an already troublesome situation.

By thoroughly researching your options and asking the right questions, you can secure lawsuit funding that aligns with your financial needs while avoiding unnecessary costs.

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Fair Rate Funding Costs and Fees

Fair Rate Funding NEVER charges up front lawsuit funding fees. In fact, our rates are among the lowest in the business.

Why Choose Fair Rate Funding

You obviously have a choice in who you use for legal funding. We offer:

• Simple and Easy Process – Approval only on the strength of your case.
• Risk – Free Proposition – Only repay if you win your case.
• Rapid Approval and Funding – Approvals often within 24 hrs.
• Up Front Pricing – Absolutely no hidden fees.