Jeffrey P. Gale, P.A. // Considerations Concerning Cash Advance Funding of Florida Personal Injury and Workers’ Compensation Cases

dollarsThe competition to advance money to those injured in accidents is fierce. The reason for the fierce competition is the potentially high rate of return on the investment.

Numerous companies, some large with a national presence, engage in the competition. Because their only security is the injury case itself (workers’ compensation and personal injury), which gives rise to the term “non-recourse funding advance“, the companies are not bound by Florida’s usury laws limiting interest rate charges. The rate can be multiple times over the 18% limit allowed in Florida. In fact, the interest rates are so high that the repayment amount can quickly double and triple the principal.

Advance companies are barred from foreclosing on real property or seeking repayment through wage garnishment. Their sole recourse for repayment is the case itself. If the case fails altogether or the recovery is not enough to repay the advance in full, it’s tough luck for the company. Given the precarious nature of accident cases, this is a real risk. Cases can “Go South,” so to speak, for a variety of reasons.

The advance agreement includes lien and assignment documents obligating the injured person’s lawyer to deduct what is owed from the settlement or final judgment and pay directly to the company.

Other important considerations include:

  • Advances pressure clients to accept bad settlement offers. Because of the high interest charged, some clients feel pressured to settle before the ideal time to limit additional interest charges.
  • Advances pressure clients to reject good settlement offers. Because of how much is owed on the advance, a client may bypass a fair settlement offer and take an unreasonable risk at trial.
  • The potential that information we provide may waive attorney-client, or work product protections. In order to assess their risk, some funding companies require lawyers to provide written evaluations of the case. Arguing waiver of the attorney-client privilege, defendants could gain access to these written evaluations.

Typically, we try to steer our clients clear of these advances. However, we understand the struggles of daily life and the need for money. Recently, we even recommended and assisted our client in obtaining an advance. He sustained a catastrophic injury in the case we are handling and needs another surgery to stabilize his condition. He did not have insurance and had run out of personal funds to cover the procedure, so he secured the money from one of the better funding companies. While the payback will be substantial, the benefit will make it worthwhile. Our client is exceedingly thankful we helped him secure the funds.

For our clients who insist on proceeding with funding, we give them some options from which to choose. This is not an all-inclusive list:

It is important for those considering funding to do their homework. Many companies (not just those listed above) offer cash advance loans. Rates and repayment terms should be considered.

Our clients frequently ask us for advances. We must respectfully refuse the request. Florida Bar Rule 4-1.8(e), reproduced below, prohibits lawyers from providing financial assistance to clients. The reasoning is sound. A lawyer who is owed money may feel compelled to compromise a case to recover his or her money — for example, prematurely entering into a settlement.

(e) Financial Assistance to Client. A lawyer is prohibited from providing financial assistance to a client in connection with pending or contemplated litigation, except that:
(1) a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; and
(2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client.


Contact us at 305-758-4900 or by email to learn your legal rights.

Jeffrey P. Gale, P.A. is a South Florida based law firm committed to the judicial system and to representing and obtaining justice for individuals – the poor, the injured, the forgotten, the voiceless, the defenseless and the damned, and to protecting the rights of such people from corporate and government oppression. We do not represent government, corporations or large business interests.

While prompt resolution of your legal matter is our goal, our approach is fundamentally different. Our clients are “people” and not “cases” or “files.” We take the time to build a relationship with our clients, realizing that only through meaningful interaction can we best serve their needs. In this manner, we have been able to best help those requiring legal representation.

DISCLAIMER: This information provided by Jeffrey P. Gale, P.A. is for informational purposes only and is intended to be used as a non-legal guide prior to consultation with an attorney familiar with your specific legal situation. It should not be considered legal advice or counseling. No such legal advice or counseling is either expressly or impliedly intended. This  information is not a substitute for the advice or counsel of an attorney. If you require legal advice, you should seek the services of an attorney.

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