In this guide
Why the timeline matters more than the rate
Funding charges grow for as long as your case stays open. The same contract can cost a little if the case settles in a few months and a lot if it goes to litigation. That’s why the calculator puts the payoff date front and center — try your expected timeline and a longer one.
Example: $5,000 at 3% a month
The figures below are an illustration, not typical terms: a $5,000 advance, $250 in one-time fees, and a 3% monthly rate, shown with monthly compounding and with simple charges.
| Paid off after | Compounding monthly | Simple |
|---|---|---|
| 6 months | $6,220 | $6,150 |
| 12 months | $7,379 | $7,050 |
| 18 months | $8,762 | $7,950 |
| 24 months | $10,414 | $8,850 |
| 30 months | $12,386 | $9,750 |
| 36 months | $14,741 | $10,650 |
At 3% a month, compounding works out to about 42.6% a year, versus 36% a year with simple charges. With compounding, the balance roughly doubles in two years.
What the law requires funders to tell you
Rules vary by state, and some states have none. Ohio’s statute is a useful benchmark for what a clear contract looks like. It requires the front page of a non-recourse litigation advance contract to show:
- the total amount advanced and an itemization of one-time fees;
- the total amount you would repay, including all fees, at six-month intervals for 36 months;
- the annual percentage rate of return for each interval, including how often charges compound.
Ohio also gives consumers five business days after receiving funds to cancel, requires the funder to state that it will make no decisions about your case, and requires your attorney to acknowledge the contract. West Virginia similarly requires a fully completed written contract, a five-business-day right of rescission and an acknowledgment from your attorney. Ask any funder for a payoff table like the one above before you sign.
Questions to ask before you sign
- Are the charges simple or compounding — and how often do they compound?
- Are charges billed in minimum blocks (for example, a full six months even if the case settles sooner)?
- What one-time fees are added, and do charges apply to the fees too?
- What would I owe at 6, 12, 18, 24, 30 and 36 months?
- Is there a cap on the total I could owe?
- Is the advance non-recourse — do I owe anything if I lose?
- How many days do I have to cancel?
- Has my attorney reviewed it?
Frequently asked questions
How is lawsuit funding different from a loan?
Pre-settlement funding is usually structured as a non-recourse advance: the company is repaid out of your settlement, and if you lose the case you typically owe nothing. Because repayment depends on the case rather than your income, the charges are usually much higher than on a regular loan. Read your contract to confirm the terms.
What does “compounding” mean on a funding contract?
With monthly compounding, each month’s charge is added to the balance and the next month’s charge is calculated on that larger balance. With simple charges, the monthly charge is always calculated on the original advance. Over long cases the difference is large — use the calculator to compare both.
Can I cancel a funding contract after I sign?
Some states require a short cancellation window. Ohio and West Virginia, for example, give consumers five business days to cancel without penalty, as long as they return the money. Check your contract and your state’s rules.
Does the payoff come out before or after my attorney’s fee?
The funding company is repaid from your share of the settlement. In practice your attorney pays the funding company from the trust account along with fees, costs and medical liens, and you receive what is left. The settlement take-home calculator shows that full picture.
Sources
- Ohio Revised Code § 1349.55 — Non-recourse civil litigation advance contracts (Ohio Legislative Service Commission)
- West Virginia Code § 46A-6N-3 — Litigation financier requirements (West Virginia Legislature)
- ABA Model Rule 1.8(e) — Financial assistance to clients (American Bar Association)
Not legal or financial advice. InjuryMath is not a law firm and does not sell or broker funding. This page gives general information based on the sources listed; your contracts and your state’s law control. For advice about your situation, talk to a licensed attorney in your state.