Simple Fee Structure

A simple fee structure is a pre-settlement funding pricing model in which the periodic fee is calculated only on the original principal advanced, not on any previously accrued fees, so the total repayment obligation grows linearly rather than at an accelerating rate over the life of the advance. A funder using a simple structure might charge a fixed percentage of the original advance for each defined period the case remains open, meaning a case that takes twice as long to resolve costs the claimant roughly twice the accrued fee rather than a compounded multiple of it. Several states that regulate consumer legal funding by statute either mandate simple, non-compounding pricing outright or make it the effective market standard by requiring disclosure tables that make compounding's cost trajectory unattractive to consumers once clearly displayed. Because simple fee structures are more predictable and generally produce a lower total repayment obligation on longer-running cases than compounding structures at the same nominal rate, they have become the pricing model most commonly marketed as consumer-friendly, and some funders differentiate their offering primarily on this basis rather than on advance speed or amount. The tradeoff for funders is that simple pricing recovers less on cases that run unexpectedly long, which pushes some funders toward more conservative funding caps or shorter-duration case selection to manage that risk.

Funders competing on simple-fee pricing tend to lean more heavily on accurate case duration estimates during underwriting, since a simple structure recovers less compensation for an unexpectedly long case than a compounding structure would, making duration risk a direct margin issue rather than something passed through to the claimant.

The move toward simple structures in regulated states has also reshaped competitive positioning in the industry, with funders that retained compounding models in less-regulated states facing increasing reputational and legal exposure as more states adopt disclosure or pricing rules that favor the simple model.