Get Approved

Your Details are safe with us. Privacy Policy

The Lawyer-Client Relationship: Are Loans Possible?

Posted on March 27, 2011 by Fast Lawsuit Team

A lawyer has a special role in the client’s life. They are there to protect the client’s best interests. This relationship is based on trust, backed up by the lawyer’s professionalism and the legal statutes that protect such relationships.

Sometimes, a client may come to the lawyer to ask for financial help. And this is perfectly understandable. The fact that the client has filed a personal injury litigation case would mean that the client is already faced with mounting bills – for the hospital, for their rental or mortgage, for their family’s daily needs and for the lawsuit itself.

After all, the lawsuit is on its way to being settled so why can’t the lawyer help the client during that time that they’re waiting. Anyway, the client will pay back the money once the lawsuit gets settled. It’s only reasonable for a lawyer to help out his client, right?

Unfortunately, this is not the case. Lawyers cannot provide his client a loan. Lending money to a client is considered unethical and may be grounds for a lawyer to undergo discipline from his state bar or worse, to be disbarred. The best that a lawyer can do is to advance the expenses of the lawsuit so that the client does not have this to worry about on top of his other financial problems.

Conflict of Interest

A loan between a lawyer and a client is deemed to create a conflict of interest. The loan may cause the lawyer to want to get into a premature settlement just to recover the loan rather than fight to get the maximum value of the settlement. They may act against the best interests of the client.

What a lawyer can do is to refer their clients to a lender (for a loan) or to a lawsuit funding provider. In some states, a lawyer is allowed to help the client obtain a loan, provided that the client is the one who is liable to repay the loan, whether the lawsuit is won and settled or not. The lawyer cannot make repayment of the loan contingent upon the settlement of the lawsuit. Also, the lawyer is prohibited from making any guarantees that they can help provide a loan to the client if the services are retained.

Lawsuit Funding

Another more feasible option is to consider is getting lawsuit settlement funding, also called pre-settlement lawsuit funding. Lawsuit funding legally allows funding where payment is made contingent to the settlement of the case. The lawyer can help by providing the legal funding specialist with the details of the case and show how strong the case is. Legal funding is given based on how probable it is that the case will be won and settled.

Although lawsuit funding is often referred to as a pre-settlement loan or a lawsuit settlement advance, it is actually not a loan. The client is not obligated to pay back the money they received from lawsuit funding in the event that they lose the case.

It must be important to note that the if a lawyer refers the client to a pre-settlement lawsuit funding provider, they must make sure that the client knows the pertinent details of the contract. This includes:

- The terms of repayment

- How the lawsuit funding will affect attorney-client privilege in that the lawsuit funding provider may require disclosure of some records and aspects of the case.

- Whether the contract requires the client to continue with the lawsuit even when they do not wish to continue and whether there are penalties if the lawsuit is settled earlier or voluntarily dismissed.

- Whether there are penalties or the right to demand immediate payment if the client dismisses the services of his current lawyer

- Other details that may not be to the client’s best interest.

That is why it is important to work with a reputable settlement funding provider such as has established a solid reputation of being transparent and fair with their dealings. They are committed to ensuring that the clients can receive their much-needed funds promptly.

Comments are closed.