Pre settlement lawsuit funding is a relatively new concept. The funding companies extend non-recourse loans to claimants who do not have sufficient funds to take on a legal battle to settle their personal injury cases. Personal injury cases can include: any automobile accident, medical or legal malpractice, harassment or discrimination at work, and sexual abuse or rape.

Consider a scenario where the claimant does not have sufficient funds to fight the legal battle. Besides, he may also require money for his personal needs such as medical expenses in case of a physical injury. He then has the option to approach any of the pre-settlement lawsuit funding companies for funds. These companies will first study the merit of the case. For this, they may seek the help of the claimant's lawyer to study the merit of the case and also to get an idea of the anticipated settlement amount. Now, based on these facts, the company would offer what is termed as a non-recourse loan. This means that the company purchases a part of the claimant's future settlement in advance. If the claimant wins the case, he would have to pay a percentage of the settlement amount to the company. If the claimant loses the company also loses, which means it gets nothing.

There is a high risk involved in this settlement. It naturally follows that the amount of fees charged by these companies is also very high. Yet, litigation can take a very long time because sometimes the cases drag on for many years. The claimant needs to have enough money to see him through till he gets the settlement amount. There may be also be situations when the injured person is unable to work or has reduced income. There fore, taking such loans can seem to be the ideal answer.

All said, it is very important to keep in mind that these loans can prove to be very expensive and a person should first explore all possibilities before settling for this option.