How Should Litigation Funding Rates Be Disclosed to Plaintiffs? A Practical Guide for Plaintiff Attorneys

Why clear rate disclosure matters

Plaintiffs should be able to understand what a litigation funding advance may cost before deciding whether it fits their needs. For plaintiff attorneys, a clear rate disclosure helps a client compare the amount advanced, the way interest is calculated, the expected repayment, and any other contract terms without translating a complicated agreement.

This guide explains a practical way to discuss those terms. It is educational information, not legal, tax, or financial advice. Funding rules and contract requirements can vary by state, case type, and agreement, so attorneys and clients should review the applicable terms before signing.

Start with the advance amount and the annual rate

The first disclosure should state the amount the client would receive and the rate in the same place. A client should not have to search through a contract to connect a dollar amount with a percentage.

A plain-language disclosure can say: “You would receive a $10,000 advance. Interest is 15% simple annual interest. Simple interest is calculated on the original advance, not on previously accrued interest.” If the rate is different for the product or stage of the case, state that difference directly.

The Milestone Foundation describes pre-settlement funding at 15% simple annual interest and post-settlement funding at 10% simple annual interest. Those figures are examples of how a funder can present a rate clearly. The signed agreement controls the actual terms of a particular advance.

Explain simple interest in dollars, not only percentages

A percentage can sound small or large without context. Give the client a dollar example using the proposed advance and a realistic time period.

For example, a $10,000 advance at 15% simple annual interest would accrue $1,500 in simple interest for one full year. If the balance remained outstanding for two full years, the simple-interest amount would be $3,000, before any separately disclosed fee or other contract term. The example should identify the assumptions and should not be presented as a guaranteed settlement payoff.

This explanation also gives the client a way to check the agreement. If the balance grows through compounding, tiered rates, minimum charges, or another formula, say so in plain language and show the effect with numbers. Do not describe a rate as “simple” unless the contract applies it that way.

Disclose when the rate starts and how time changes repayment

Clients need to know when interest begins. State whether the calculation starts when funds are delivered, when the agreement is signed, or at another defined event. Explain how the balance changes if the case resolves sooner or later than expected.

A useful disclosure includes at least two time examples, such as an estimated balance after 12 months and after 24 months. Label each example as an illustration. The final amount can depend on the funding date, repayment date, advances or renewals, fees, and the agreement’s terms.

Attorneys should also ask whether additional advances change the calculation. If they do, the disclosure should explain whether each advance has its own rate and start date or whether the amounts are combined.

List fees and repayment protections separately

An interest rate is not the full price if the agreement also includes an application fee, processing charge, administrative charge, or other payment. List each charge separately, state when it is payable, and show whether it is included in the example balance.

The disclosure should also explain whether the funding is non-recourse. With a non-recourse advance, repayment generally depends on the case resolving in a way covered by the agreement; the exact contract language matters. Explain what happens if the case is lost, dismissed, or resolves for less than expected. Do not promise an outcome beyond the signed terms.

If the agreement includes a repayment cap, show the cap in both words and dollars when possible. The Milestone Foundation describes a 2X cap in its public funding materials. A client-facing explanation should identify the cap’s base, what charges count toward it, and any conditions that affect its application.

Keep rate disclosure separate from court-disclosure rules

“Funding disclosure” can describe two different questions. One is consumer price transparency: what the plaintiff will pay under the funding agreement. The other is litigation disclosure: whether a funding arrangement must be revealed to a court or opposing party under a statute, court rule, or case-specific order.

Explain which question the conversation addresses. The rate discussion should not imply that a client has satisfied a court or jurisdictional disclosure obligation. For an attorney-focused overview of the separate court-disclosure issue, see litigation funding disclosure rules.

Use a client-friendly rate disclosure checklist

Before a client signs, the attorney and client should be able to find clear answers to these questions:

• How much money will the client receive?
• Is the rate simple or compound, and what is the annual rate?
• When does interest begin?
• How would the balance change after 12 months and 24 months?
• Are there application, processing, administrative, or other fees?
• Is the advance non-recourse, and what does that mean if the case does not recover?
• Is there a repayment cap, and what amounts count toward it?
• What happens if the case resolves early, late, or for less than expected?
• Can the client request another advance, and would that change the calculation?
• Where can the client ask questions before signing?

The answers should match the agreement. If a term is difficult to explain in one or two sentences, that is a signal to slow down and review it rather than relying on a percentage alone.

Why the funder’s identity and status should be clear

The disclosure should identify the funding company and explain the relationship among the funder, the attorney, and the plaintiff. Clients should know who makes the funding decision, who receives repayment, and whom to contact about the balance.

It is also reasonable to explain the funder’s business model in plain language. The Milestone Foundation is a 501(c)(3) nonprofit company that describes its consumer litigation funding as mission-driven. That status does not replace a contract review, but it gives attorneys and clients useful context when comparing funding companies and their pricing practices.

Help the client compare the offer before signing

A transparent rate disclosure gives the client time to consider whether the advance is necessary, affordable under the agreement, and consistent with the client’s goals. Attorneys can direct clients to the pre-settlement funding requirements guide for general eligibility information and to the simple-interest settlement funding guide for a plain-language comparison of funding terms.

For attorney resources and a way to discuss an appropriate next step, visit The Milestone Foundation’s attorney resources or contact the organization. A clear conversation about rates does not guarantee approval or a particular recovery. It does help a plaintiff make a more informed decision while preserving the attorney’s focus on the client’s interests.