Non-Recourse Funding

Non-recourse funding is a type of cash advance for plaintiffs that is only repaid if their case is successful. Instead of taking out a traditional loan that must be repaid no matter what happens, you receive money now in exchange for a portion of your future settlement or judgment. If your case loses or does not result in a recovery, you owe nothing back to the funding company.

This structure is designed to reduce financial pressure while your attorney negotiates or litigates. Non-recourse funding can help you cover rent, groceries, medical bills, transportation, and other essentials so you are not forced to accept a lowball settlement just to stay afloat.

On this page, you will learn what non-recourse legal funding is, how it works, how it differs from traditional loans, what cases may qualify, and how to evaluate offers safely. You will also find links to related pages on our site, including how lawsuit funding works, legal funding FAQs, and case types we fund, so you can explore the bigger picture before making any decisions.

What Is Non-Recourse Legal Funding?

Non-recourse legal funding is a cash advance based on the anticipated value of your lawsuit. The funding company evaluates your case, estimates its potential settlement or verdict, and offers you a portion of that expected value now. The advance is “non-recourse” because the company’s only source of repayment is your future recovery—if there is no recovery, there is no repayment.

Unlike a traditional loan, non-recourse funding does not require monthly payments, does not involve wage garnishment, and does not allow the company to pursue your personal assets if the case fails. The funding company assumes the risk that your case may not succeed. If you lose, they absorb the loss.

Because of this risk structure, non-recourse legal funding is often described as “risk-free” for plaintiffs from a repayment standpoint: you do not owe the money back if there is no settlement or judgment in your favor.

How Non-Recourse Legal Funding Works

The basic process for non-recourse legal funding is straightforward, but it is important to understand each step. For a more detailed walkthrough, you can also review our page on how lawsuit funding works and our legal funding FAQ.

Here is how it typically works:

1. You have an active lawsuit with an attorney. Non-recourse funding is usually available only to plaintiffs who are represented by counsel on a contingency-fee basis. The strength of your case and your attorney’s involvement are central to the evaluation.

2. You apply for funding. You or your attorney submit basic information about your case—such as the type of claim, injuries, liability facts, and insurance coverage—to a funding company. There is usually no credit check, no employment requirement, and no income verification because the funding is based on your case, not your credit history.

3. The funding company reviews your case. The company evaluates the merits of your claim, the likelihood of success, and the potential settlement or verdict value. They may request documents from your attorney, such as police reports, medical records, or insurance information.

4. You receive an offer. If the company believes your case has sufficient value and a reasonable chance of success, it will extend an offer for a specific funding amount. This is usually a fraction of the estimated case value to account for risk and time.

5. You and your attorney review the contract. The funding agreement outlines the advance amount, fees, and repayment terms if your case is successful. It is critical that you and your attorney review this document carefully and ask questions about costs, caps, and how repayment is calculated over time.

6. Funds are disbursed. Once the contract is signed, funds are typically wired or deposited into your account. You can use the money for living expenses, medical care, transportation, or other essential needs.

7. Repayment occurs only if you win. If your case settles or results in a favorable judgment, the funding company is repaid from the proceeds, usually directly from your attorney’s trust account. If you lose, you owe nothing and the company cannot pursue you personally for repayment.

Non-Recourse vs. Recourse Loans

One of the most important distinctions in this space is the difference between non-recourse legal funding and traditional recourse loans. Understanding this difference can help you avoid products that put your personal finances at risk.

Recourse loans—such as credit cards, personal loans, or home equity lines—require repayment regardless of what happens with your lawsuit. If you cannot pay, the lender may report you to credit bureaus, send your account to collections, sue you, or pursue your assets and wages.

Non-recourse legal funding is fundamentally different. The funding company’s only “recourse” is your future settlement or judgment. If there is no recovery, there is no repayment obligation, and the company cannot pursue your income, credit, or personal property.

This distinction is why non-recourse legal funding is often treated differently from loans under state law and why it is sometimes described as a legal advance or sale of a portion of your future recovery rather than a traditional loan.

Common Case Types That May Qualify

Non-recourse legal funding is most commonly associated with personal injury and civil litigation where there is a clear defendant, liability theory, and potential insurance coverage. For a broader overview, you can visit our case types we fund page and our main personal injury lawsuit loans hub.

Examples of cases that may qualify include:

Some funding companies also consider other civil cases, such as employment discrimination, wrongful termination, or certain commercial disputes, depending on the facts and potential recovery.

Benefits of Non-Recourse Legal Funding

When used carefully, non-recourse legal funding can provide several important benefits for plaintiffs who are under financial pressure while their case is pending.

Financial breathing room. Funding can help you cover rent, utilities, groceries, childcare, and other essentials so you are not forced to settle early for less than your case is worth.

No monthly payments. Because repayment only occurs if you win, there are no monthly bills or payment schedules to manage while you are recovering and waiting for your case to resolve.

No credit or employment requirements. Approval is based on the strength of your case, not your credit score or job history. This can be especially important if your injuries have kept you out of work.

Risk is shifted to the funding company. If your case loses or settles for less than expected, you do not owe the advance back. The funding company assumes that risk as part of its business model.

Potential leverage in settlement negotiations. With basic living expenses covered, you and your attorney may have more time to pursue a fair settlement instead of feeling pressured to accept the first low offer.

Risks and Considerations

Non-recourse legal funding is not free money, and it is not the right choice for everyone. It is important to understand the costs, terms, and long-term impact before you sign any agreement.

Cost of funding. Because the funding company takes on significant risk, fees and charges can be higher than traditional loans. Over time, the repayment amount can grow substantially, especially if your case takes years to resolve.

Impact on your net recovery. Any repayment to the funding company comes out of your settlement or judgment, along with attorney’s fees and case costs. You and your attorney should carefully estimate how much you are likely to receive after all deductions.

Contract complexity. Funding agreements can be detailed and technical. You should ask your attorney to review the contract, explain the terms, and help you understand how repayment is calculated, whether there are caps, and what happens if the case settles for less than expected.

Regulatory differences by state. Some states have specific rules or guidance related to legal funding, while others treat it more like a private contract. For general consumer and financial protection information, you can review resources from the Consumer Financial Protection Bureau and your state attorney general’s office.

How to Evaluate a Non-Recourse Funding Offer

Before accepting any non-recourse funding offer, it is wise to compare options, ask questions, and consider alternatives. You can also review our legal funding FAQ and how it works pages for additional context.

Key questions to ask include:

  • What is the total amount I may owe if my case settles in six months, one year, or two years?
  • Is there a maximum cap on the repayment amount?
  • How are fees calculated, and do they compound over time?
  • What happens if my case settles for less than expected?
  • Can my attorney negotiate or request changes to the contract?

For broader perspectives on legal funding and consumer protection, you may find it helpful to review materials from organizations such as the Federal Trade Commission, the American Bar Association, and the National Consumer Law Center, which often discuss high-cost financial products and contract transparency.

Alternatives to Non-Recourse Legal Funding

Non-recourse legal funding is one tool among many. Depending on your situation, you may want to consider alternatives before committing to a funding agreement.

  • Negotiating payment plans with medical providers or creditors
  • Using short-term assistance programs or community resources
  • Exploring disability benefits or other public programs
  • Discussing case strategy and expected timelines with your attorney

For general information on managing debt and evaluating financial products, you can review resources from the USA.gov debt and credit page and the FDIC consumer resources.

Where Non-Recourse Funding Fits in Your Legal Journey

Non-recourse legal funding is not a substitute for a strong case or a skilled attorney, but it can be a bridge between where you are now and the time when your case finally resolves. Used carefully, it can help you maintain stability, protect your basic needs, and give your attorney room to pursue a fair outcome.

If you want to see how non-recourse funding fits into the broader picture of legal finance, you can explore our main how lawsuit funding works guide, our case types we fund overview, and our personal injury lawsuit loans hub. Together, these pages provide a complete view of how funding interacts with your case, your attorney, and your long-term financial goals.

Ultimately, the decision to use non-recourse legal funding should be made in close consultation with your attorney, with a clear understanding of the costs, benefits, and impact on your final recovery. When approached thoughtfully, it can be a powerful tool to help you get through a difficult chapter without sacrificing your future.

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