Do I Have to Repay Pre-Settlement Funding If My Case Takes Years to Settle?

Yes — if your case resolves favorably, repayment is required regardless of how long the case takes. The non-recourse structure protects you if you lose, not if the case takes longer than expected.

Pre-settlement funding is non-recourse: if you lose your case, you owe nothing. But if your case settles or results in a verdict in your favor, repayment is required — no matter how many years pass. The funding agreement specifies the repayment terms at the time of signing, including the rate structure and how repayment is calculated based on case duration.

Because the funder takes on all the risk of case loss, longer case timelines do increase the total repayment amount. Most funding agreements use simple interest that accrues over the life of the case. A case that takes four years will have a higher total repayment obligation than an otherwise identical case that settles in one year. This is disclosed upfront in the funding agreement and reviewed by your attorney before you sign.

The repayment priority at settlement is: (1) medical liens, (2) attorney fees, (3) litigation expenses, (4) pre-settlement funding repayment, and (5) the remaining balance to you. Your attorney handles all distributions at closing — you do not write a check or transfer funds directly to the funder. Everything flows through the settlement trust account.

If your case timeline is uncertain or litigation is expected to be prolonged, discuss the long-term repayment implications with your attorney before applying. An experienced litigation funding attorney can model out total repayment at different settlement horizons so you can make an informed decision.

Source: American Legal Finance Association (ALFA) — Consumer Litigation Funding Code of Conduct. See also: ALFA rate disclosure requirements for member funders.

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