Knowing how to explain litigation funding to a client starts with one plain sentence. It is money a person may receive while a case is still open, under a written agreement that is separate from the lawsuit. It is not the settlement, and it is not a guess about who will win. Before the client decides, walk through the amount, the charges, when repayment is due, and what the papers say if the case brings in nothing.
Talk with The Milestone Foundation
A short talk works better than a long lecture. Say what the paper actually says. Then stop and let the client ask what still feels unclear. The goal is a decision the client can explain back, not a rushed yes.
How to explain litigation funding to a client in the first minute.
Open with everyday words, then pause. A useful start sounds like this: “Litigation funding is money you may be able to receive while your case is still going. The written agreement says how much you get, how the charges work, and when repayment is due. If the case brings in money, repayment may come from that recovery. You can read the terms, ask questions, and decide.”
Do not treat a nickname as the whole product. “Lawsuit loan,” “cash advance,” and “pre-settlement funding” can mean different contracts. Use the offer in front of you. A label does not tell you the rate, the fees, or what happens if there is no recovery.
It also helps to separate the case from the funding. You might say, “This is a separate money agreement. It does not decide the strength of your claim, and it does not promise a settlement. We can talk about how it fits your case. The choice to take it is yours.” That keeps the talk honest without pushing the client toward one answer.
If the client asks who offers this kind of funding, you can point to a specific company and its status. The Milestone Foundation’s page for attorneys says the organization is a 501(c)(3) nonprofit litigation funding company. That status is useful background. It does not replace a look at the actual agreement or the client’s own needs.
What the client should be able to say back.
The client does not need every clause memorized. They should be able to repeat the main points in their own words. Stay with the agreement. Do not fill gaps from memory or from a brochure.
- Cash in hand. What is the advance, and what amount would the client actually receive after any charges taken at the start?
- How cost grows. What rate or other charge applies? Is it simple or compound? When does it start, and is there a fee or a limit?
- When repayment is due. What event triggers repayment? Is it limited to case proceeds, and what does the paper say about timing?
- No recovery. What happens if the case brings in nothing? Read the exact words, including any conditions. Do not turn a narrow line into a broad promise.
- What the client must do. Are there notices, updates, or other steps while the case is open?
- Who decides the case. Who controls strategy and settlement? Read any lines about notices, settlement, or how money is paid out.
- Other options. Could the client wait, use another resource, or meet the need another way? Do not rush past that question.
If a term is fuzzy, stop and ask the provider for a written answer. The phrase “non-recourse” can be a fair description. It is still not a substitute for the clauses that define recovery, repayment, and exceptions. The Foundation’s funding questions and answers can add background. The signed agreement is still the document for that client’s offer.
How to show the cost without guessing the case.
Clients often focus on the cash they need this week. Also show how the amount due can change if the case takes longer. Ask the provider for written payoff examples on more than one date. Use the proposed amount and the math in the agreement. Mark each figure as an illustration. It is not a prediction of when the case will end or how much it will recover.
A simple example makes the idea concrete. Take a hypothetical $1,000 advance at 15% simple interest for one full year. If there are no fees and no other adjustments, the interest for that year is $150. The illustrated balance is $1,150. That is arithmetic, not an offer and not a client’s payoff. Real agreements can use a different rate, a different start date, fees, a cap, or another repayment rule.
| Method in the example | Details to compare |
|---|---|
| 15% simple annual interest | Plain description: Interest is figured on the original amount. Balance after one year on $1,000: $1,150, before any other charge. What to confirm in writing: Rate, start date, fees, any cap, and payoff math. |
| 15% compounded once a year | Plain description: Later interest can be figured on a balance that already includes interest. Balance after one year on $1,000: About $1,150 after one year. Later years can pull apart. What to confirm in writing: How often it compounds, plus fees and balance math. |
| A different rate or fee schedule | Plain description: Use only the method written in that agreement. Balance after one year on $1,000: Cannot be known from the rate label alone. What to confirm in writing: The full schedule and dated payoff examples. |
The table is why a rate by itself is not a full cost talk. Ask for examples at the same points in time, such as six months, one year, and two years, when those dates fit the case. Confirm whether each figure includes every charge and whether any cap changes the total. If the provider cannot show the math, get a written clarification. Do not guess the missing piece.
On its live site, The Milestone Foundation says pre-settlement funding is 15% simple annual interest and does not compound. The homepage also lists a 2X cap next to that rate. The site describes the funding as non-recourse, meaning the person owes nothing if the case does not resolve. Those are the organization’s published descriptions. Confirm them against the client’s own papers. The funding application page is where a reader can review the published process. Do not promise approval, a set amount, or a case result.
How to separate repayment from control of the case.
Keep the money question and the legal question apart. First, say what the agreement says about repayment and what event makes it due. Next, read what it says if there is no recovery. Then look at any lines about notices, case updates, settlement, or paying out the proceeds. If the words are unclear, do not invent the answer from a web page. Ask for a written explanation and review it with the client.
Do not promise that a funder has no rights unless the agreement supports that sentence. Also do not imply that an advance hands the provider control of strategy or settlement unless the terms and the governing rules say so. Describe each role from the documents and from the facts of the representation.
Professional duties depend on the rules that apply and on the facts of the case. This article is general information, not legal advice. Check the rules in your jurisdiction and your firm’s own process. The Legal Information Institute’s collection of New York rules of professional conduct is one public example of ethics rules. It does not replace the rules that govern a particular lawyer.
For more on this organization, the attorney resources page is general background. As with any provider, still weigh the contract, the cost, the alternatives, and what the client needs right now.
A fair way to compare two funding offers.
A fair comparison uses the same assumptions. Ask each provider about the same advance, the same dates, and the same kinds of charges. Do not set one company’s headline rate next to another company’s full payoff. Collect the agreement and the fee schedule before you draw a conclusion.
- Write down the net cash. Note the amount offered and the amount the client would receive after any deduction.
- List every charge. Record interest, fees, minimum charges, and anything else that changes the payoff.
- Check the math. Ask whether interest is simple or compound, when it starts, how often it is added, and whether unpaid charges join the balance.
- Match the examples. Use the same dates and the same amount for each offer. Keep the assumptions next to each illustration.
- Read the risk terms. Check what happens with a recovery and without one, including conditions, exceptions, and any cap.
- Note ongoing duties. Flag notice, cooperation, update, settlement, or proceeds language.
- Leave room to decide. Invite questions and time to read. Do not suggest that the case or the representation depends on taking an advance.
A simple worksheet keeps the talk concrete. If a provider has not given a clear written answer, leave the box blank or write “not provided.” Do not fill it with a guess.
| Question | Offer comparison |
|---|---|
| Net cash delivered | Offer A: From the written offer. Offer B: From the written offer. Why it matters: Shows cash after any deduction. |
| Payoff on the same dates | Offer A: Attach the illustration. Offer B: Attach the illustration. Why it matters: Shows the effect of time on matching assumptions. |
| Interest and fees | Offer A: Copy the exact terms. Offer B: Copy the exact terms. Why it matters: A rate alone may hide other charges. |
| No-recovery language | Offer A: Summarize and note the clause. Offer B: Summarize and note the clause. Why it matters: Shows the stated result and any exception. |
| Client duties | Offer A: List the relevant terms. Offer B: List the relevant terms. Why it matters: Shows what is required while the case is open. |
Skip market claims you cannot verify, and do not invent a competitor’s rate to make one offer look better. If a provider will not put the terms in writing, treat that as an open question for the client. It is not proof of a particular cost. Save the papers and note where each figure came from so the client can look again later.
Words that keep the funding talk balanced.
Choose words that separate a contract line from a future event. “The agreement says repayment is due if the case recovers” is clearer than “you will owe.” Call a sample payoff an illustration. State the assumptions next to it. Do not present it as an estimate. If the result depends on a recovery, say that. Do not suggest that the outcome or the timing is already known.
A short teach-back finds confusion without putting the client on the spot. After you review the agreement, ask three questions. What amount would you receive? What does the agreement say about how the balance changes? What does it say if the case does not recover? If an answer is thin, go back to that section together. A polite nod is not proof that every term landed.
Ask what need the client is trying to meet before you discuss an advance. That question keeps the talk on the client’s life, and it leaves room to wait or to use another option. Funding can cover a current cash need. If there is a recovery, repayment can reduce what the client keeps. Whether that tradeoff is acceptable depends on the written terms and on the client’s situation.
Skip sales language. Do not call an advance risk-free, guaranteed, or the right choice for every person. Do not say that nonprofit status by itself makes an agreement a fit. The Milestone Foundation states that it is a 501(c)(3) nonprofit. That is context. Terms, cost, alternatives, and the client’s priorities still drive the decision. The about page has more on the organization’s background.
What to write down after the client meeting.
Follow your office process and keep a short factual note. Depending on that process, the note can record which agreement and fee schedule you reviewed, the questions the client asked, the payoff illustrations and their assumptions, and any request for a clearer answer. If a later answer arrives in writing, keep it with the file.
Record what you explained. Do not write that the client understood every possible result. Give the client copies of the materials you reviewed and a way to ask follow-up questions. If the client declines funding, respect that choice and continue the representation under the engagement and the duties that apply.
When a client wants more on this organization, two pages help without replacing the contract review. The overview of nonprofit litigation funding explains the published model. The general advance requirements cover what an application typically asks. Both are background. Neither takes the place of the proposed agreement.
Review attorney funding information
Frequently asked questions.
Is litigation funding the same as a bank loan?
Not always. The name does not define the deal. Read the contract for repayment, charges, and what it says if there is no recovery. If a legal label matters, check the law that applies and get the right professional guidance.
Can I tell a client they never repay if the case loses?
Only say what that agreement supports. Read the no-recovery section and any conditions or exceptions. If it is unclear, get a written answer. Do not build a broad promise from a line in a brochure.
How do I explain simple interest?
Simple interest is figured on the original amount. It does not add old interest into the balance for the next calculation. Explain the rate and the timing in the contract, and use a written payoff example. Fees and other terms can still change the total.
Should a client pick a provider because it is a nonprofit?
No. Nonprofit status describes the organization’s legal form and mission. It does not decide whether an advance fits one client. Compare the written terms, the cost, the repayment conditions, and the other options. The client should decide without pressure.
Where can a client read The Milestone Foundation’s published terms?
Start with the live site, not a summary from memory. The application page states 15% simple interest on pre-settlement advances, with no compounding, and describes the funding as non-recourse. Confirm any cap, fee, or payoff figure against the papers offered to that client.
Leave the funding decision with the client.
A careful explanation ties the client’s question to the written terms. It names what is still unknown. It leaves the choice with the client. If you want to walk through how this 501(c)(3) nonprofit funding company describes its advances, the attorney page is the next stop.