What Is the Difference Between Pre-Settlement and Post-Settlement Funding?

Pre-settlement funding is issued while the case is still pending. Post-settlement funding is issued after a settlement is agreed to but before funds are distributed. The risk profile and underwriting differ significantly.

Pre-settlement funding is issued before the case resolves. Liability, outcome, and recovery amount are all uncertain at the time of the advance. The funder assumes the full risk of case loss — if the case fails to produce a recovery, no repayment is owed. Underwriting requires a full case review because the funder is betting on an uncertain outcome.

Post-settlement funding is issued after a settlement agreement is executed but before the plaintiff receives the funds. At this stage, the recovery amount is known — the settlement is agreed to. The remaining risk is procedural: that the payment will actually be made on the agreed timeline. Post-settlement funding carries far less case risk because liability and recovery are established. As a result, it is typically faster to approve and may carry lower rates.

The situations that generate post-settlement funding needs include: structured settlement payment delays, probate delays in wrongful death cases requiring court approval, government entity settlements with mandatory waiting periods, and cases where multiple lien resolutions must occur before distribution. These delays can extend for months after a settlement is reached.

For plaintiffs, the practical question is: has your settlement been agreed to in writing? If yes, you may be a candidate for post-settlement funding rather than pre-settlement funding. If your case is still pending with no settlement agreement, pre-settlement funding is the applicable product. Your attorney can help you determine which applies.

Source: ALFA Consumer Litigation Funding Code of Conduct. Post-settlement funding is regulated separately from pre-settlement funding in some states.

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