Guide
If you’re considering pre-settlement funding, you might wonder how the funding company decides whether to approve your request – and for how much. Unlike a bank loan that relies on your credit score or income, legal funding decisions are based almost entirely on the merits of your case. The funding company’s goal is to determine how likely your lawsuit is to succeed and roughly how much it might settle for. After all, pre-settlement funding is typically non-recourse, meaning the company only gets repaid if you win or settle. This makes them very careful in evaluating each case.
In this article, we’ll explain the key factors funding companies look at when judging a case’s strength. Understanding these criteria can help you and your attorney prepare the information needed for a smooth evaluation. We’ll also walk through the evaluation process and offer tips to improve your chances of approval.
Why Case Merit Matters in Legal Funding
Pre-settlement funding companies assume a risk by advancing money to plaintiffs. If your case ultimately loses in court or doesn’t settle, the funding provider gets nothing back. Because of this, they aren’t going to hand out money unless they’re reasonably confident that your case is strong. Case merit – the likelihood that you will win and receive a substantial settlement or judgment – is the core of their decision-making.
This risk-based approach actually benefits you. It means no credit checks or income verification are needed – only the facts of your case matter. Decisions also come quickly (often within days) since underwriters focus on case information rather than your finances. And if your application is approved, it’s an indicator that your claim is strong (conversely, a denial might highlight issues to discuss with your lawyer).
In short, funding companies care about whether your lawsuit is likely to result in a payout, so they scrutinize the case details closely.
Key Factors Underwriters Consider
While each company may have its own specific checklist, most legal funding underwriters will evaluate your case on several common factors:
Clear liability: They’ll look at who appears to be at fault in your case. If evidence strongly indicates the other party was at fault, that’s a big plus. If liability is unclear or disputed, the funder will view the case as riskier.
Severity of damages: Cases involving severe injuries, high medical bills, or major financial losses are much more likely to be funded, because larger damages typically lead to larger settlements (ensuring there’s enough to repay the advance). A minor injury case with low economic loss might not qualify at all, or only for a small advance.
Evidence and documentation: Detailed documentation also strengthens your case. Underwriters will want to see things like medical records linking your injuries to the incident, official reports (police, incident reports), and other proof of harm and fault. A well-documented case gives the funder confidence that you can prove your claim.
Insurance coverage or defendant’s ability to pay: This usually means checking the defendant’s insurance coverage or assets. For example, a strong case with $100,000 in damages isn’t promising if the defendant only has a $25,000 insurance policy and no other assets to collect from. Conversely, a case with a deep-pocketed defendant or high insurance limits is more attractive to funders.
Stage of the case and legal representation: Having an attorney is a must (virtually all funders require you to have legal representation). It also helps if your lawsuit is already filed or a demand letter sent – signs that the case is moving forward. Cases further along (for example, treatment completed and a trial date scheduled) give underwriters more to go on, but even early-stage claims can be funded if the other factors are very strong.
Each of these factors contributes to the funding decision. Essentially, the company is asking: “How likely is this case to win, and for roughly how much?” The stronger and clearer the answer, the better your chances of getting approved for funding.
The Evaluation Process
Understanding how the evaluation works can help you prepare. Here’s what typically happens when you apply for pre-settlement funding:
Initial application and case summary: You’ll provide basic details about your case in the application (type of claim, when and how the incident happened, injuries sustained, etc.) and your attorney’s contact information.
Discussion with your attorney: The funding company will reach out to your lawyer to gather case documents and ask specific questions. They might request things like the complaint filed in court, medical reports, insurance information, and any settlement offers that have been made so far. This step is crucial – a responsive attorney who can promptly supply documentation will speed up the evaluation.
Underwriting analysis: A professional (often called an underwriter) reviews all the info. They’ll probably use the factors above as a guide – checking how strong the liability proof is, the extent of damages, insurance coverage, and so on. They may also evaluate how much money you’re asking for relative to the expected case value; typically, funders won’t advance an amount that’s too high a percentage of the potential settlement (to ensure you’ll still net something after repayment).
Decision and offer: Based on the analysis, the company will decide to approve or deny funding. If they approve, it will usually be for a specific amount. You’ll get an offer outlining the approved advance and the terms (interest rate, etc.). Sometimes, they might approve a smaller amount than requested if they feel the risk warrants caution.
Agreement and payout: If you accept the offer, you’ll sign a funding agreement. Then the company disburses the money to you, often within 24-48 hours. (Your attorney will also sign to acknowledge the arrangement and commit to repay the advance from the settlement proceeds.)
Throughout this process, communication is key. Ensure your attorney is on board with your funding request and responsive to the funder’s inquiries. Any delays in providing information can slow down or even jeopardize your approval.
Conclusion
Pre-settlement funding companies evaluate cases similarly to how an experienced attorney would – weighing fault, damages, evidence, and potential payout – to judge if a claim is likely to succeed. Knowing what they look for means you can prepare your application to meet those criteria and improve your chances of approval.
Keep in mind, a funding decision isn’t personal. If a funder hesitates or declines, consider it feedback on your case’s weaknesses and discuss them with your lawyer.
The team at Instabridge prides itself on a fair and efficient evaluation process. We know you’re already under stress from your injury and legal fight, so we strive to make the funding review as smooth as possible. If you have a pending lawsuit and are wondering if it qualifies for pre-settlement funding, contact Instabridge today. Our experts will review your case’s merits and let you know quickly – with no obligation – if we can provide financial support. We’re here to answer your questions and help you make the best decision for your situation.
