Can I get a cash advance on my lawsuit in New York?

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

How the law came together

The Legislature passed the original bill as S.1104-A/A.804-C, signed December 19, 2025 as chapter 645 of the Laws of 2025, which placed the rules in General Business Law article 39-H (S.1104-A). On February 13, 2026, chapter 11 of the Laws of 2026 (A.9442/S.8808) repealed article 39-H and moved the rules into a new Financial Services Law article 10, sections 1001 to 1011 (A.9442).

The rules apply from the 180th day after the 2025 chapter became law, which fell in June 2026, and contracts signed before then are not covered (section 1009(E)). The registration and reporting sections take effect one year after the 2026 amendment, in February 2027.

The law protects a “consumer,” defined as a person who has a legal claim, lives or is domiciled in New York, and whose claim “is or will be filed in a New York state or federal court” (section 1001(F)).

The 25% limit and the $500,000 ceiling

Section 1003(K) bars a company from requiring you to pay charges that exceed “twenty-five percent of the gross proceeds from the applicable legal claim plus the funded amount.” Section 1003(L) adds that charges come only from the proceeds and only to the extent proceeds are available. A company may not provide more than $500,000 to a consumer (sections 1001(C), 1003(M)). Under section 1004, charges are payable only after the resolution is final, any appeals are over and your lawyer has received the money.

Example only, with round hypothetical numbers. Suppose you received a $10,000 funding and your case later settles for $100,000 gross. Twenty-five percent of the gross is $25,000, so the most the company could require is the $10,000 back plus $25,000 in charges, or $35,000, even if its time-based schedule would have produced more. If the case brings in nothing, you owe nothing. Your contract may charge less, and its terms decide the real figure. See how much of a $100,000 settlement do I keep for what else comes out of a settlement.

What the contract must say

Section 1002 requires a plain-language contract filled in before you sign, your initials on every page, the maximum charge, a statement that you owe nothing beyond the disclosed charges and a running total if you have more than one contract with the same company. It bars prepayment penalties. Section 1005 requires 12-point bold disclosures: the funded amount, itemized charges and a payment schedule on the front page; a statement that the company has no role in settlement but must be told the outcome; a boxed statement that charges are paid only from proceeds; and a “do not sign” warning above your signature. Your lawyer gets a copy of the signed contract.

You may cancel “within ten business days after the funding date” by returning the full funded amount, without penalty or further obligation (section 1002(A)(III)). Section 1005(B) describes the same period as running from when you receive the payment, so ask the company which date it uses. Our page on the right to cancel explains how to do it in time.

Your lawyer’s acknowledgment

Your attorney must attest that the attorney reviewed the disclosures with you, works on a written contingency fee, will run the proceeds through a trust account or settlement fund, will take all reasonable steps to disburse funds as the contract provides, received no referral fee and gave you no tax, benefits or financial advice. If the acknowledgment is missing, the contract is “null and void” (section 1002(B)-(C)). Communications between your lawyer and the company do not waive privilege or work-product protection (section 1008).

What a New York funder may not do

Section 1003 bars a company from paying or accepting referral fees with lawyers, medical providers, chiropractors or physical therapists; sending you to a specific lawyer (bar referral services excepted); advertising false or misleading information; influencing decisions about your claim or settlement; seeking a waiver of rights such as a jury trial; paying court costs, filing fees or attorney’s fees from the funding; and funding you if your lawyer has a financial interest in the company. It may not fund a claim it has reason to believe is frivolous or based on false facts, and it may not fund you over an unresolved earlier contract unless that one is bought out or extinguished, or the companies fund you at the same time with your and your lawyer’s written consent, within the cap. See can a funding company control my case.

What New York courts have said

Before the statute, New York courts treated true contingent advances as purchases. In Cash4Cases, Inc. v. Brunetti (1st Dep’t Dec. 6, 2018), the Appellate Division held that “Assignment agreements such as the agreement at issue here are not loans” because repayment depended on the lawsuit, so usury law did not apply. It upheld an agreement with a 45.93% annual percentage rate as not unconscionable where Brunetti sought the advance, had a lawyer and initialed every page (Cash4Cases v. Brunetti).

Labels do not always control. In Denemark v. New Chapter Capital, Inc. (1st Dep’t July 23, 2026), funding for a divorce case said “THIS IS NOT A LOAN,” but the court found it was one: it allowed a UCC-1 filing, stated an amount “presently owed,” required repayment on events other than a recovery and carried little real risk. Charging 18.96% a year, it was void as usurious above New York’s 16% civil limit (Denemark v. New Chapter Capital). For the national picture, see is a lawsuit cash advance a loan.

Enforcement and where to complain

A company found in willful violation in a specific funding case “waives its right to recover the charges” in that case, and the Attorney General may seek a civil penalty of up to $5,000 per violation (section 1006). From February 2027, companies must register with the Department of Financial Services for a $500 fee; banks and lenders licensed under Banking Law article 9 are exempt, and the superintendent may suspend or revoke a registration after a hearing (section 1009).

• Attorney General: file a consumer complaint online or call the OAG Help Line at 1-800-771-7755 (complaint page).
• Department of Financial Services: complaints go through its consumer complaint portal.

Your three-year deadline

CPLR 214(5) gives three years to bring “an action to recover damages for a personal injury,” with exceptions in other sections (CPLR 214). Claims against public entities have much shorter notice rules. An advance does not extend any of them.

What to ask before you sign

• What would I owe at each stage, and what is 25% of my claim’s likely gross proceeds?
• Is the funding under $500,000, including any earlier funding?
• When is my tenth business day to cancel?
• Has my lawyer signed the acknowledgment?
• Will I owe anything before the case is final and my lawyer has the money? Our page on how a lawsuit advance is paid back walks through payout.

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.