Ethical Issue: What the Georgia Bar Says about Pre-Settlement Funding

The questions many attorneys have about pre-settlement funding tend to surround the ethics of this type of funding. Many plaintiffs have increased need for funds due an inability to work as a result of their injuries. As a result, they might struggle with cash flow issues while waiting for the settlement money to come in as they still have everyday expenses and costs that need to be paid. Pre-settlement funding, offered by companies such as Gain, allows plaintiffs to pay for their life needs while awaiting the results of a trial.

When it comes to the ethics of such funding, the Georgia Bar has made its stance clearly known.

Can Attorneys Give Funding to Cover Clients Expenses?

The big question when it comes to pre-settlement funding for plaintiffs is: can attorneys loan their clients money against a specific case?

No. Rule 1.8(e) of the State Bar clearly explains the limitations placed on attorneys when it comes to loaning money to a client. Lawyers can’t provide financial assistance to their clients, except that they can advance court costs and litigation expenses, making the repayment of those costs contingent on the case’s outcome. An attorney can also pay the court costs and fees on behalf of the client, if the client is unable to cover the costs him or herself. In order for a fee to be contingent, the agreement must be in writing and needs to state the way that fee is determined, including the percentage paid to the attorney after settlement as well as any other expenses that need to be paid.

If a client needs cash, the attorney should suggest pre-settlement funding, offered by companies such as Gain, to pay for their life needs while awaiting the results of a trial.

Funding Can’t Affect Attorney-Client Relationship

Under Rule 1.6 of the State Bar Governance Rules, any information a lawyer gets from a client over the course of their professional relationship is confidential. The State Bar has determined that a company that provides funding to a firm or attorney shouldn’t also be privy to the information given to the lawyer by his or her client. The Bar stresses that it is up to the attorney to make sure that the funding company or bank understands that it can’t interfere with a lawyer’s obligations to his or her clients.

Gain’s processes are fully adherent with Rule 1.6.

On the Question of Interest

Is it ethical for a law firm to charge its clients interest to make up for the costs related to it obtaining funding? The Georgia State Bar has determined that it is ethical for a firm to charge interest on past-due bills, as long as the client is given notice that interest will be charged on delinquent bills.

Gain offers funding to plaintiffs to help them cover everyday costs while they wait for a case to go through the court system and funding to attorneys to help improve a firm’s cash flow. Contact us today to learn more about the methods we use to determine funding and to find out why we have the best reputation in the industry.


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