Can I get a cash advance on my lawsuit in Connecticut, and what does Connecticut law say?

By Michael Shemtoub, trial attorney, Beverly Law. Updated November 2026.

The 12 percent rule: Conn. Gen. Stat. §§ 37-4 and 37-8

Connecticut’s general usury statute is short. As a general rule, other than a pawnbroker, no one may “directly or indirectly, loan money to any person” and charge or agree to receive “interest at a rate greater than twelve per cent per annum” (§ 37-4). The penalty is severe. Under § 37-8, “No action shall be brought to recover principal or interest, or any part thereof, on any loan prohibited by sections 37-4, 37-5 and 37-6.”

Licensed small loan companies have their own rates, below. The 12 percent rule matters only if an advance is a loan in the first place.

The small loan law: Conn. Gen. Stat. §§ 36a-555 to 36a-558

• What counts. A “small loan” includes “any loan of money or extension of credit, or the purchase of, or an advance of money on, a borrower’s future potential source of money, including, but not limited to, future pay, salary, earned but unpaid wage or salary income, pension income or a tax refund,” if the amount is $50,000 or less and the APR is above 12 percent (§ 36a-555). APR is figured under the federal Military Lending Act rules.
• Who needs a license. Without a small loan license, no one may make a small loan to a Connecticut borrower, arrange or broker one, receive payments on one, buy one, or advertise one in the state (§ 36a-556(a)).
• The rate limits. A small loan under $5,000 may not carry an APR above “the lesser of thirty-six per cent” or the Military Lending Act maximum; for $5,000 to $50,000 the limit is 25 percent (§ 36a-558(d)(1)(A)).
• The penalty. A small loan made by someone licensed or required to be licensed that breaks those terms “shall not be enforced in this state.” It “shall be void and no person shall have the right to collect or receive any principal, interest, charge or other consideration thereon” (§ 36a-558(c)(1)).

The list of income sources does not mention lawsuits, but it is a list of examples, and the definition reaches purchases as well as advances without requiring installment payments. A company could still argue that an advance repaid only if the case wins is not a small loan. We found no Connecticut appellate decision and no published Department of Banking position on whether a non-recourse lawsuit advance is a small loan. Courts in other states have split on the loan question; see is a lawsuit cash advance a loan.

What a Connecticut bankruptcy court said about one advance

In In re Knight (Bankr. D. Conn. Mar. 31, 2015), a funding company asked Judge Albert S. Dabrowski to rule that an injury victim’s advance survived his bankruptcy. The contract said the advance was “not a loan” but an “investment.” The court did “not concur” with treating the obligation as something other than a debt and held that the contingent right to be repaid was a claim under the Bankruptcy Code. It then rejected the company’s fraud claims, so the debt was not excepted from the discharge.

The court also relied on Connecticut’s rule that “the common law does not permit assignments of causes of action to recover for personal injuries,” quoting Gurski v. Rosenblum & Filan, LLC, 276 Conn. 257 (2005). Because no settlement money existed yet, it held “any lien or assignment in the proceeds of the personal injury action arising under the Agreement is invalid and unenforceable.” That ruling turned on bankruptcy timing; the court did not decide usury or licensing. More: lawsuit funding and bankruptcy.

Champerty: never adopted, but public policy still applies

In Rice v. Farrell, 129 Conn. 362 (1942), the Connecticut Supreme Court said the common-law doctrines of champerty and maintenance as applied to civil actions “have never been adopted in this state,” and “the only test is whether a particular transaction is against public policy.” The court agreed with the Restatement that a bargain to pursue a claim for a share of the proceeds is illegal if the claim’s owner “shall not settle or discharge it,” at least as to non-lawyers. A funding contract that limits your right to settle could raise that issue, though no Connecticut appellate court we found has applied Rice to a consumer advance.

The lawyer’s rule

Connecticut’s ethics rules are printed in the Judicial Branch’s Practice Book, and we could not open the official text of its Rule 1.8(e) for this page, so we do not state what it allows. Ask your lawyer directly whether Connecticut lets a lawyer help with living costs, and see can my lawyer give me money before settlement for the ABA model rule.

Your filing deadline in Connecticut

For injuries caused by negligence, recklessness or medical malpractice, § 52-584 requires suit “within two years from the date when the injury is first sustained or discovered or in the exercise of reasonable care should have been discovered,” and never “more than three years from the date of the act or omission complained of.” A funding contract does not pause either limit.

What to ask before you sign

• Does the company hold a Connecticut small loan license, or does it say it needs none? The Department of Banking’s license lookup can tell you who is licensed.
• What APR does the payoff equal at 12, 24 and 36 months?
• Does the contract limit your right to settle, or claim an assignment of your case?
• Has your lawyer read it?

Common questions

Related pages

Cash advance on a lawsuit · Laws by state · Injury law FAQs

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.