A pre-settlement advance is money paid to a claimant before a case resolves, repaid only from the recovery and typically without recourse to the claimant if the case is lost. Its price depends on the likelihood of recovery, the expected duration and the liens ahead of it.
The advance is secured by an assignment of part of the proceeds. If there is no recovery, nothing is owed. That feature is what separates it from a loan and is also why state rules often treat it separately, with disclosure, licensing and rate requirements.
Underwriting looks at the case type, the venue, the stage, the counsel and the stack of liens that will be paid from the same recovery. Medical liens and statutory liens commonly rank ahead, which can leave less for the advance than the headline settlement suggests.
A pre-settlement advance is not a prediction that the claimant will win and not a loan against future wages. It is a priced position in a legal outcome, and the price should reflect the distribution of resolution times as well as the chance of success.
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