By Michael Shemtoub, trial attorney, Beverly Law. Updated November 2026.
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What the funding statutes say
These are the control provisions in statutes we read directly. The state law table lists the rest.
| State | What the funder may not do |
|---|---|
| California, Bus. & Prof. Code 6254(a)(6) | Receive any right to make, or make, decisions about the conduct of the claim or any settlement. The contract must also say the company has “no role” in deciding whether, when, or for what amount the claim settles (6252(a)(3)) |
| Georgia, O.C.G.A. 7-10-4(a)(1) | Direct or decide the course of the case or its settlement, including hiring or changing lawyers, choice of witnesses retained for the case, and strategy. The rule is read in favor of the person funded |
| Illinois, 815 ILCS 121/15 | Receive a right to, or make, decisions about the conduct of the claim; those stay with you and your lawyer |
| Nevada, NRS 604C.300(1)(f) | Receive a right to, or make, decisions about the conduct, settlement or resolution of the claim |
| Montana, 31-4-104(1)(l)-(m) | Make, influence or direct decisions on the claim, including retained witnesses, strategy, and settlement |
| Nebraska, 25-3303 | The contract must say in bold type that the company has no right to make decisions about the claim and that those decisions stay with you and your attorney |
California backs its ban with remedies. A company that breaks a rule in section 6254(a) faces automatic termination of the contract, statutory damages up to $10,000 per violation or three times your actual damages, whichever is greater, plus attorney fees and court orders (6254(b)). The same section bars the company from seeking a waiver of your right to a jury trial (6254(a)(7)) and from making funding depend on you replacing your lawyer with one it recommends (6254(a)(9)).
The ethics rules: settlement is your call
Even where no funding statute exists, the rules your lawyer must follow put the settlement decision with you. ABA Model Rule 1.2 says “a lawyer shall abide by a client’s decision whether to settle a matter,” and Model Rule 5.4(c) bars a lawyer from letting “a person who recommends, employs, or pays the lawyer to render legal services for another” direct the lawyer’s professional judgment (ABA Litigation News). California’s Rule 1.2(a) likewise has the client decide whether to settle (California Rules of Professional Conduct).
The State Bar of California’s Formal Opinion 2020-204 applies this to funding. It says “a lawyer’s duties are not dictated by the funding contract but by the lawyer’s ethical duties,” that a funding agreement does not change the lawyer’s duty to pursue the client’s interest, and that a lawyer could not settle against the client’s wishes. Where a funder does have some say under its contract, the lawyer must explain how that limits the representation.
A typical consumer advance pays you, not your lawyer. In California the company may not use the funding to pay court costs, filing fees or attorney fees at all (6254(a)(8)). So the funder is usually not the one paying your lawyer, and your lawyer’s duty runs to you.
What a contract can still require
A funding company may ask for things that touch your case without controlling it. Common examples, with the statutes that allow them:
- Notice of the outcome. California requires every contract to make you or your lawyer tell the company about any settlement, verdict or other result (6252(b)).
- Status updates. A California company may seek updated information about the status of the claim (6252(a)(3)(B)). Privileged information goes to the company only with your written consent (6256(c)).
- A payment direction. Missouri requires you to give your lawyer a written direction you cannot revoke, telling the lawyer to notify the company when the case resolves and to pay what is due from the proceeds within ten business days after the company confirms the amount (RSMo 436.554).
- Payment through the trust account. Acknowledgment states have your lawyer confirm the money will go through the trust account or a settlement fund, and some, such as California and Nevada, also have the lawyer commit to paying the company under the contract.
None of these lets the company decide whether you accept an offer. They do mean the company will learn when your case settles and for how much. What the company sees is covered on our privilege page.
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How to spot a control clause
Control language rarely uses the word “control.” Read for clauses like these and ask your lawyer about each one:
- the company’s consent or approval is needed before you settle, or before you reject an offer
- a minimum settlement amount, or a penalty if you settle below a figure
- the company may approve, veto or pick your lawyer, or you must change lawyers to get funded
- the company may contact the insurer or the defense directly about the case
- a power of attorney letting the company sign settlement papers or endorse checks
- a waiver of a jury trial or of other rights
- the whole balance becomes due, or charges rise, if you drop the case or change course
Some of these are banned outright by the statutes above. Others may be lawful in a state with no funding law, where the contract and general contract law decide. Federal court rules show that approval rights do exist in some funding deals: New Jersey’s federal court makes parties with funding of fees and expenses disclose “whether the funder’s approval is necessary for litigation or settlement decisions” (D.N.J. L. Civ. R. 7.1.1). Our page on contract red flags covers other terms worth checking.
What to ask before you sign
- Does any clause require the company’s consent before I settle or reject an offer?
- Does my state have a funding statute that bans funder control, and does this contract follow it?
- Will the company contact my lawyer, the insurer or the defense? About what?
- What case information will I be asked to share, and with whose consent?
- If I want to settle for less than the amount owed, what does the contract say happens?
Common questions
Can the funding company stop me from accepting a settlement?
Not under the statutes above, which bar the company from settlement decisions. Your lawyer must follow your decision on whether to settle.
Can it make me turn down an offer and hold out?
No. That decision is also yours. Our FAQ on what happens if you reject a settlement offer explains the tradeoffs, and how an advance affects your settlement covers the money side.
Can the funding company make me change lawyers?
In California a company may not condition funding on you firing your lawyer and hiring one it recommends (6254(a)(9)), and Georgia bars funders from decisions about appointing or changing lawyers.
Will the company talk to my lawyer?
Usually, for status and payment. In California, privileged information may be shared only with your written consent.
What if my contract has a control clause?
Show it to your lawyer. In California, a company that violates section 6254(a) faces automatic termination of the contract and damages. The lawsuit cash advance guide has the rest of this section. Beverly Law does not offer or arrange lawsuit funding and receives no payment from funding companies. Beverly Law offers a free case review in English or Spanish at (310) 552-6959 if you have questions about your injury case. You owe no fees or costs unless we win.
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Related pages
Cash advance on a lawsuit · Laws by state · Injury law FAQs
Sources
- California AB 931 (Bus. & Prof. Code 6252, 6254, 6256), official bill text (leginfo.legislature.ca.gov)
- CalMatters Digital Democracy, chaptered text of AB 931 (calmatters.digitaldemocracy.org)
- Georgia SB 69 (2025), as signed (O.C.G.A. 7-10-4) (gov.georgia.gov)
- Illinois Consumer Legal Funding Act, 815 ILCS 121 (ilga.gov)
- Nevada NRS Chapter 604C (leg.state.nv.us)
- Montana Code 31-4-104 (mca.legmt.gov)
- Nebraska Rev. Stat. 25-3303 (nebraskalegislature.gov)
- Missouri RSMo 436.554 (revisor.mo.gov)
- ABA Litigation News, Who's in charge here (quoting Model Rules 1.2 and 5.4(c)) (americanbar.org)
- California Rules of Professional Conduct (Rule 1.2) (calbar.ca.gov)
- State Bar of California Formal Opinion 2020-204 (Litigation Funding) (calbar.ca.gov)
- D.N.J. Local Civil Rule 7.1.1 (order of June 21, 2021) (njd.uscourts.gov)
Important: This page is general information, not legal or medical advice, and reading it does not create an attorney-client relationship. Every case is different; talk to a lawyer about yours. Texas cases are handled by the firm’s Texas-licensed attorneys, Joyce Ondich and John Efstathiou. Last reviewed: November 7, 2026.