Pre-settlement Lawsuit Loan

Written by Patricia Tunstall
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Pre-Settlement Lawsuit Loan and the Attorney

A pre-settlement lawsuit loan by third parties raises objections in some groups--mostly insurance and business--that this jeopardizes the proper role of the attorney in the case. Normally, an attorney, working with the client, establishes the cause of action (medical malpractice, breach of contract, negligence), and develops a strategy, a winning approach to the presentation of the case. The attorney is being paid to use professional training, experience, and judgment to conduct a successful case for the client.

In fact, attorneys themselves safeguard their independence to such an extent that they will withdraw from cases in which the client refuses to follow advice. The reason is obvious--a client and an attorney going in different directions means a case in disarray. If the client speaks out and comments on the evidence when the attorney should be the spokesperson, the attorney is not only battling the defendant, but the client. A pre-settlement lawsuit loan, however, does nothing to put the attorney's role at risk.

Preserving the Role of the Attorney

Plaintiff funding is strictly an investment move by third-party companies. Although lawyers are often members of such a company, their function is to act as experts and examine the case to see if it is a strong one. Ultimately, the goal of the company is to make a profit, not to direct strategy in any pending lawsuit.

After making a lawsuit advance, the company may contact the attorney to check on the status of the lawsuit, but that is the extent of the relationship. The independence of the attorney is protected and preserved, so far from being a threat, third-party companies consciously avoid any interference. Although the "threat" argument is common among opponents of any pre-settlement lawsuit loan, the argument does not have any basis in fact.

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