Should You Consider A Lawsuit Loan?

Law Articles

Between medical bills, car repairs, and lost wages, the aftermath of a car accident is an expensive time. Unfortunately, lawsuit settlements don't always come quickly. It can take months or sometimes even years to reach a settlement or receive a judgement in your favor, even if you have a good case and a great lawyer. But your bills don't stop piling up while you're waiting. To address this need, there are companies that make lawsuit loans to plaintiffs – money that you can use now that will be paid back upon receipt of your settlement. But are these loans a good idea? Take a look at a few things that you need to know about lawsuit loans.

How the Loans Work

Lawsuit loans are fairly easy to get, if you have a good case. The loan company doesn't check your credit the way a traditional lender would. Instead, the lender will talk to your attorney and look over documents from your court case to decide how likely you are to win your lawsuit. If they determine that you're a good risk, you'll get the loan. Because this process bypasses the usual credit checks, you can get your money fairly quickly.

You most likely won't be allowed to borrow the full amount of your potential settlement. Instead, you and your lawyer will negotiate an amount, along with the interest and fees that will need to be paid back. Then, if you win your lawsuit, that amount goes to your lender. If you happen to lose your lawsuit, you won't be required to repay the loan – this is a risk the lender takes, and it's one of the reasons why the fees tend to be high. If you win, but get less than expected, you and your attorney may be able to negotiate lower fees or a payment plan.

Lawsuit Loans and Attorney/Client Privilege

You can't get a lawsuit loan without your attorney's involvement. Partly because the lender needs to verify that you're likely to win your case and partly because they need to make sure that you're not promising to pay back more money than you can afford once attorney's fees and other expenses are taken into account.

The chances are very good that your attorney will try to dissuade you from taking out a lawsuit loan. In fact, some personal injury attorney refuse to work with lawsuit lenders at all. Why? Partly because lawsuit loans are a bit like payday loans – they have high fees and interest and are rarely a good financial decision. But another problem is that lawsuit loans may damage your attorney/client privilege.

You already know that any details of your case discussed between you can your attorney are confidential. Neither you nor your attorney can be compelled to disclose that information. What you may not know is that there are circumstances that can break attorney client privilege, and one of those circumstances is involving a third party in confidential discussions or discussing confidential information with a third party after the fact. Many attorneys worry that sharing information with lawsuit lenders breaks privilege, making formerly privileged information admissible in court.

In most cases, the lenders do not need confidential information. And in some cases, privilege may be extended to communications shared with a lender. However, the case law is unclear, with judges sometimes ruling in favor of extending privilege to the lenders and sometimes ruling against it. A lot depends on how your judge views the situation.


Despite the drawbacks, there are times when a lawsuit loan may be your best option. If you are facing eviction or foreclosure, for example, maintaining your residence is the most pressing issue. However, you should attempt to find the funds you need from other means first.

Also, if your attorney advises that the information the lender is asking for will compromise your privilege, take the warning seriously. Consider shopping for a lender that asks for less sensitive information or searching for another type of loan. Remember, your car accident attorney is the person with your best legal interests in mind, so you should take their opinion on getting a loan seriously.  

If you still have questions about handling your case, click here for more info on car accident cases. 


8 April 2016

Noni and the Accident

My name is Noni. When I was in college, I was hit by a car while crossing the street. My life was never in danger, but I did break a few bones and had a lot of huge medical bills. I was hoping I wouldn't have to get involved with an attorney, but unfortunately, it came down to that. I used a family friend who is an accident attorney to get some compensation. A few years later, I was hit while riding my bike and had to go through the same process. I suppose I'm lucky to be alive. And it's thanks to accident attorneys that I have been able to put my life back together. I started this blog as a way to let others know just how much lawyers can help you in certain situations.