By Michael Shemtoub, trial attorney, Beverly Law. Updated November 2026.
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What the advance does to your net recovery
The value of your claim comes from your injuries, your losses, who was at fault and how much insurance is available. Our FAQ on how lawyers calculate settlement value explains those factors. Taking an advance does not add to or subtract from that value. The advance is a separate deal between you and a funding company about how your share will be split later.
What changes is the split. Typically, attorney fees, case costs and liens come out first, and then the funding company is paid from what is left for you. In California the amount owed must be a predetermined amount based on intervals of time from the funding date, and it may not be a percentage of the recovery (Bus. & Prof. Code 6253). So the longer the case takes, the larger the payoff, until the contract’s maximum or a legal limit is reached. California stops charges at 36 months from the funding date (section 6250(a)). Our cost page explains how charges are built.
Example only: the net-recovery math
These are round hypothetical numbers. Your own figures come from your fee agreement, your actual bills and liens, and the funding contract.
| Example only | No advance | $5,000 advance, payoff $9,000 | Same advance, case runs longer, payoff $12,000 |
|---|---|---|---|
| Settlement | $100,000 | $100,000 | $100,000 |
| Attorney fee (33⅓% in this example) | $33,333 | $33,333 | $33,333 |
| Case costs | $4,000 | $4,000 | $4,000 |
| Medical liens after reductions | $20,000 | $20,000 | $20,000 |
| Funding company payoff | $0 | $9,000 | $12,000 |
| You receive at the end | $42,667 | $33,667 | $30,667 |
| Total you received, counting the advance | $42,667 | $38,667 | $35,667 |
In this example the $5,000 advance costs $4,000 if the case ends on time and $7,000 if it runs longer. The settlement-math FAQs walk through the fee, cost and lien steps at three amounts: $25,000, $50,000 and $100,000.
Some states cap the payoff against the recovery. Georgia bars a funder from contracting for or recovering more than the share of the proceeds the plaintiffs themselves recover after attorney fees and costs are paid (O.C.G.A. 7-10-4(a)(4)), and Montana bars a funder from receiving more than 25% of the judgment or settlement (31-4-104(1)(d)).
Pressure to settle, or room to wait
An advance can push in either direction. Money for rent and bills can let you turn down an early offer you would otherwise take out of need. Yet the payoff climbs while you wait, so each extra month of litigation costs you more of the settlement.
The research gives no simple answer. Avraham and Sebok, studying records from one large consumer funder, wrote that clients often seek funding “when they are under financial pressure” and that funded plaintiffs still keep “a very strong interest in the outcome of their case” (104 Cornell L. Rev. 1133 (2019)). In a footnote about weak cases, they also suggested that a funder’s rejection might lead a plaintiff to drop the case or accept a low offer. The decision to settle stays yours either way, as our page on whether a funding company can control your case explains.
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Can the defense find out?
Sometimes. It depends on the state and the court.
| Where | What the rule says |
|---|---|
| Georgia | A party may obtain discovery of “the existence and terms and conditions of any litigation financing agreement.” Discovery from a nonparty funder applies only to agreements of $25,000 or more, and disclosure alone does not make the information admissible at trial (SB 69, amending O.C.G.A. 9-11-26) |
| Montana | The contract must be delivered, without a discovery request, to the other parties, the court and any insurer with a duty to defend or pay (31-4-108) |
| Wisconsin | Without waiting for a request, a party must give the other parties any agreement giving someone other than a contingency-fee lawyer a right to be paid from the case proceeds (Wis. Stat. 804.01(2)(bg)) |
| Federal court, New Jersey | Parties must disclose a non-party that funds attorney fees and expenses on a non-recourse basis, including whether the funder must approve litigation or settlement decisions (L. Civ. R. 7.1.1) |
| Federal court, Delaware | In Chief Judge Connolly’s cases, parties with third-party funding must disclose the funder, whether its approval is needed for settlement decisions, and its financial interest (standing order; Insurance Journal report) |
The federal rules are narrower than they first look. New Jersey’s rule covers funding “for some or all of the attorneys’ fees and expenses for the litigation,” and the court later clarified that a statement is needed only where such funding exists (clarification notice). Delaware’s order applies only to one judge’s docket. An advance that pays your rent and none of your lawyer’s fees or case expenses does not fit New Jersey’s wording on its face, though the judge decides close questions. Courts without a specific rule use their ordinary discovery rules, and the Georgia page covers that state in more detail.
What this means for you
- Ask your lawyer to run your own version of the table above using real fee, cost and lien figures.
- Ask the company for the payoff at 6, 12, 24 and 36 months, in writing.
- Ask your lawyer whether your court requires disclosure of funding agreements.
- Borrow only what covers the need. Every dollar advanced adds charges against your share.
- Read how an advance is paid back before you sign.
Common questions
Will the insurance company offer less because I took an advance?
The advance is not part of what the defense owes. Your claim’s value rests on liability, damages and insurance limits. What changes is how much of the settlement reaches you.
Do I have to tell the defense I have funding?
Only where a statute, court rule or discovery request requires it. Georgia, Montana and Wisconsin have specific rules, and some federal courts have local ones. Ask your lawyer about your court.
Can the funding company see my settlement amount?
Yes, in most cases. California requires every contract to make you or your lawyer report the outcome, including any settlement.
Could the advance let me reject a low offer?
It might, because it covers bills while you wait. The payoff keeps growing, though, so a later and larger settlement may leave you with less than you expect. Run the numbers with your lawyer.
Is there any limit on how much of my settlement the company can take?
In a few states. Georgia bars the funder from taking more than what the plaintiffs keep after fees and costs, and Montana caps it at 25% of the recovery. Elsewhere, the contract’s maximum amount controls. 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
- Avraham & Sebok, An Empirical Investigation of Third Party Consumer Litigant Funding, 104 Cornell L. Rev. 1133 (2019) (publications.lawschool.cornell.edu)
- California AB 931 (Bus. & Prof. Code 6250, 6253), official bill text (leginfo.legislature.ca.gov)
- CalMatters Digital Democracy, chaptered text of AB 931 (calmatters.digitaldemocracy.org)
- Georgia SB 69 (2025), as signed (amending O.C.G.A. 9-11-26; 7-10-4) (gov.georgia.gov)
- Montana Code 31-4-108 (mca.legmt.gov)
- Montana Code 31-4-104 (mca.legmt.gov)
- Wisconsin 2017 Act 235, Wis. Stat. 804.01(2)(bg) (docs.legis.wisconsin.gov)
- D.N.J. Local Civil Rule 7.1.1 (order of June 21, 2021) (njd.uscourts.gov)
- D.N.J. notice clarifying L. Civ. R. 7.1.1 (July 29, 2021) (njd.uscourts.gov)
- D. Del., Standing Order Regarding Third-Party Litigation Funding Arrangements (Connolly, C.J., Apr. 18, 2022) (ded.uscourts.gov)
- Insurance Journal, report on the Delaware standing order (Apr. 22, 2022) (insurancejournal.com)
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.