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

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

The 2025 bill that failed: SB 175

Senate Bill 175, “An Act to create provisions governing litigation financing,” was introduced on January 30, 2025. The version approved by the Senate Judiciary Committee (amendment 175B) would have required litigation funders to be licensed as money lenders under chapter 54-4, limited a funder to 25 percent of any judgment or settlement, given consumers five business days to cancel, barred funders from influencing case decisions, and required the contract to be disclosed to the other parties and the court (amendment 175B).

The action log shows the Senate passed it 35-0 on February 20, 2025, after a further amendment, and the House Judiciary Committee recommended it 8-4 on March 3. On March 5, 2025, the full House voted 30-40 and the bill failed. Further amendments were adopted along the way, so the final version may have differed from 175B. We did not verify any later South Dakota bill on the subject.

South Dakota’s interest and money lending rules

South Dakota has no general usury ceiling. SDCL 54-3-1.1 says that “Unless a maximum interest rate or charge is specifically established elsewhere in the code,” parties may agree in writing to any rate or charge.

One limit is set elsewhere. SDCL 54-4-52 states: “No person may engage in the business of lending money without a license.” For those licensees, SDCL 54-4-44, as changed by Initiated Measure 21 (effective November 16, 2016), says “no licensee may contract for or receive finance charges pursuant to a loan in excess of an annual rate of thirty-six percent,” a figure that includes ancillary product charges and other fees. A loan made in violation “is void and uncollectible as to any principal, fee, interest, or charge,” and a violation is a Class 1 misdemeanor. The Division of Banking says it treats “anyone engaged in the business of lending money” as a money lender subject to chapter 54-4.

The open question is whether a nonrecourse advance is “lending money.” We found no South Dakota court decision or Division of Banking ruling that answers it. The 2025 bill would have settled it by statute, and it failed. Courts elsewhere have split, as explained in is a lawsuit cash advance a loan.

Unruh (2010): assigning the proceeds of an injury claim

Most funding contracts give the company a right to be paid from your recovery. In A. Unruh Chiropractic Clinic v. De Smet Insurance Co., 2010 SD 36, two people hurt in a car crash each signed an “Assignment of Proceeds” giving their chiropractor a right to be paid from any settlement. The clinic notified the at-fault driver’s insurer. They later settled, the insurer paid them directly, and the clinic sued the insurer.

The South Dakota Supreme Court ruled against the clinic. It said that “South Dakota recognizes the common-law prohibition on the assignment of personal injury claims,” a rule aimed at “maintenance and champerty, i.e., profiteering and speculating in litigation.” The court held that calling the assignment one of proceeds, and an equitable one, did not save it, because “the distinction does not permit enforcement of an equitable assignment that violates public policy.” It found the assignments let the clinic intermeddle in the patients’ decisions about the litigation, and it left any change in the rule to the Legislature.

Unruh involved a medical provider and a claim against an insurer, not a funding company. It shows how South Dakota courts view a third party’s claim on injury proceeds, and a funding contract that depends on an assignment could be tested against it. Medical provider claims on settlements are covered in lawsuit funding and medical liens.

Your filing deadline in South Dakota

SDCL 15-2-14(3) gives three years after the cause of action accrues for “An action for personal injury,” except where a statute sets a different limit. Ask a lawyer which deadline applies to your claim; an advance does not extend it.

What to ask before you sign

• Does the company hold a South Dakota money lender license? You can ask the Division of Banking.
• What is the total cost as an annual rate, counting every fee, and how does it compare with the 36 percent limit in SDCL 54-4-44?
• Does the contract assign part of your claim or its proceeds, and what does the company say happens if a court refuses to enforce that assignment?
• How will the company be paid from your settlement? See how a lawsuit advance is paid back.
• Does any clause give the company a say in settlement? See can a funding company control my case.

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.