If you are hurt, out of work and waiting on an insurance company, the advertisements for “lawsuit loans,” “settlement advances” and “pre-settlement funding” are aimed at you. The pitch is simple: cash in a few days, and nothing to repay if you lose. Both statements are true. What the pitch leaves out is what the money costs if you win, which is the outcome you and I are both working toward. This page explains what Nebraska law requires of these companies, what it does not protect you from, why I advise against it, and what to do instead.
What Is Pre-Settlement Funding?
Nebraska’s statute calls it “nonrecourse civil litigation funding” and defines it as “a transaction in which a civil litigation funding company purchases and a consumer assigns the contingent right to receive an amount of the potential proceeds of the consumer’s legal claim” out of any “settlement, judgment, award, or verdict the consumer may receive” (Neb. Rev. Stat. § 25-3302). In plain terms, you sell the company a piece of your future settlement in exchange for cash today.
- You must already have a lawyer. The Act applies to a consumer who “has a pending legal claim and is represented by an attorney at the time he or she receives” the funding.
- It is “nonrecourse.” The contract must say, in a box, in bold fifteen-point capital letters, that if there is no recovery or not enough to repay the company in full, “you will not owe the civil litigation funding company anything in excess of your recovery unless you have violated this purchase agreement.”
- It is paid from the settlement. Your attorney must acknowledge in writing that the proceeds “will be disbursed via the trust account of the attorney,” so the company is paid when the case is, before the money reaches you.
What Nebraska Law Requires, and What It Leaves Out
The Nonrecourse Civil Litigation Act, passed in 2010, is a disclosure law. It makes sure you can see the price. It does not limit the price.
| What the Act requires | What it does not do |
|---|---|
| The front page must show the amount funded, every one-time fee, and “the total dollar amount to be repaid by the consumer, in six-month intervals for thirty-six months” | It sets no maximum rate or fee |
| The contract must show “the annual percentage rate of return,” including how often it compounds | It does not stop the balance from growing while your case is pending |
| You may cancel “within five business days following the consumer’s receipt of funds without penalty” by returning the money | After five business days, there is no right to cancel |
| The company “may not assess fees for any period exceeding thirty-six months” | Until then, fees “shall compound at least semiannually” |
| The company must state that it “shall have no right to and will not make any decisions” about your case or its settlement | It does not change the arithmetic: the more you owe, the less a given settlement puts in your pocket |
| The company must register with the Secretary of State and post a bond or letter of credit | The Act’s enforcement is the company’s registration, which can be suspended or revoked; it provides no fine or damages remedy for the consumer |
| The company may not pay “commissions or referral fees to any attorney” or to “any medical provider, chiropractor, or physical therapist” | It does not bar an attorney from owning part of a funding company; it requires the attorney to disclose it |
The contract must also carry this warning in bold, immediately above your signature: “Do not sign this contract before you read it completely or if it contains any blank spaces. … Before you sign this contract you should obtain the advice of an attorney.”
What Does It Actually Cost? How the Compounding Works
Because the Act sets no rate, the cost is whatever the contract says. To show how compounding every six months behaves, here is the arithmetic on a $5,000 advance at a rate of 20 percent per six-month period. That rate is a number I chose to illustrate the math. It is not any company’s quoted rate, and a real contract may be higher or lower and may add one-time fees on top.
| Time since funding | Owed on a $5,000 advance (illustration) |
|---|---|
| 6 months | $6,000 |
| 12 months | $7,200 |
| 18 months | $8,640 |
| 24 months | $10,368 |
| 30 months | $12,442 |
| 36 months | $14,930 |
Nebraska requires the company to put this same kind of table, with its real numbers, on the front page of the contract. If you ever consider one of these agreements, that table is the only part of the sales pitch that matters. Read the 24-month and 36-month lines, not the six-month line.
Why I Advise My Clients Against It
When a client asks me about pre-settlement funding, I advise against it. I understand why people consider it; the bills do not stop because you were hurt. But two problems come up again and again: the rates are extremely high, and repaying the advance eats into the case proceeds, sometimes leaving the client with little. That makes a settlement harder to reach. The other drawbacks follow from the same law, and most of them only show up at the end of the case, when it is too late to undo.
- The rates are extremely high, and the law does not cap them. Nebraska requires the company to disclose its rate on the front page of the contract, but it sets no limit on it. Nebraska’s own lawyers’ advisory committee warned, as far back as 2000, that a client considering a lender who takes repayment from the recovery “must understand that the interest rate in such a scenario is likely much higher than a more conventional loan arrangement” (Nebraska Ethics Advisory Opinion for Lawyers No. 00-2).
- Time works against you. An injury claim can take anywhere from six months to six years. You do not control how long the insurance company takes, and every six months the balance compounds.
- Repaying it eats into the case proceeds. The funding company is repaid out of the settlement before the money reaches you, from the same funds that pay the attorney fee, the case costs and any medical liens and reimbursement claims. Sometimes what is left for the client is very little.
- It makes settlement difficult. The company has no say in your case. But when a large share of any settlement is already owed to the funder, an offer that would otherwise be fair can leave too little to accept, and the case becomes harder to resolve. Money taken to relieve pressure ends up adding it.
- One advance leads to another. A second company cannot fund you without “first buying out that civil litigation funding company’s entire accrued balance,” so a second advance starts by paying off the first, fees and all, and then compounds on the larger number.
- “You owe nothing if you lose” has a condition. The protection applies “unless you have violated this purchase agreement.” What counts as a violation is in the contract’s fine print.
- The protections are thin if something goes wrong. The Act regulates the company through its registration. It does not give you a damages claim against a company that overreaches.
Results that took litigation, not a quick settlement. Past results do not guarantee a similar outcome; every case is different.
The last of those took five and a half years from the fall to the resolution. Cases that are worth fighting for are often the ones that take the longest, and those are exactly the cases in which an advance costs the most.
Can My Lawyer Lend Me Money Instead?
No, and the reason is worth knowing. The Nebraska Rules of Professional Conduct provide that “a lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation,” with two exceptions: a lawyer “may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter,” and may pay those costs for an indigent client (Neb. Ct. R. of Prof. Cond. § 3-501.8(e)). The official comment says lawyers may not make or guarantee “loans to their clients for living expenses.” Iowa’s rule is the same.
So a lawyer can carry the cost of the case itself, such as filing fees, records and experts, but cannot pay your rent. If a lawyer steers you toward a particular funding company, ask why. The law prohibits the company from paying the lawyer a referral fee, and it requires the lawyer to tell you in writing “whether the attorney … does or does not have a financial interest in the civil litigation funding company.”
What to Do Instead: Alternatives to Pre-Settlement Funding
The pressure is real, and “just wait” is not an answer. These are the places to look first.
- Use your health insurance for treatment. Treatment billed to your health plan does not have to be paid out of pocket while the claim is pending. I explain how this works in who pays your medical bills while a car accident case is pending.
- Check your own auto policy for medical payments coverage. If you bought it, it pays medical bills up to its limit regardless of who was at fault.
- Providers who will wait. Nebraska gives doctors, hospitals, chiropractors and physical therapists a lien on the settlement, which is why many will treat now and be paid at the end. Unlike a funding contract, a provider’s lien is limited by statute and does not compound.
- Settle the vehicle claim separately. The claim for your car, including a rental, can usually be resolved long before the injury claim, without signing away the injury claim. See the property damage release.
- Workers’ compensation, if you were on the job. If the crash or injury happened while you were working, weekly benefits are “sixty-six and two-thirds percent of the wages received at the time of injury,” up to the state maximum, and they start long before any settlement (§ 48-121). See car accidents while working.
- Disability coverage and paid leave. Short-term disability insurance through your employer, sick leave and paid time off exist for this. Your lost income is still part of your claim; see lost wages after a car accident.
- Talk to your creditors. Landlords, lenders and utilities will sometimes agree to wait or to reduced payments when they know a claim is pending. It costs nothing to ask.
- Conventional borrowing. A loan from a bank, a credit union or family has a stated rate and does not grow with the length of your case.
If You Decide to Do It Anyway
It is your decision, not mine. If you conclude there is no other way, protect yourself with the tools the Act gives you.
- Tell your lawyer first. The contract requires your attorney’s written acknowledgment, so your lawyer will find out either way. Have the conversation before you apply.
- Confirm the company is registered. A funding company “cannot engage in the business” in Nebraska unless it has registered with the Secretary of State.
- Take the smallest amount that solves the problem. Every dollar compounds.
- Read the front-page table to the 36-month line, and look for one-time and broker fees.
- Do not sign a contract with blanks. The Act requires it to be “completely filled in.”
- Remember the five business days. If you change your mind, return the funds within five business days of receiving them and the contract is cancelled without penalty.
- Use one company, once.
Is It Different in Iowa?
Yes: Iowa has less protection, not more. As of October 2026 I have found no Iowa statute regulating these contracts the way Nebraska’s Act does. Bills on the subject were introduced in the Iowa Legislature in 2025 and 2026, and none has been enacted. That means none of the disclosures described above, the five-day cancellation right or the 36-month limit is required by Iowa statute. If your claim is in Iowa, my advice against funding is stronger still.
Statutes and court rules quoted on this page were read at their official sources on October 3, 2026. The repayment table is an arithmetic illustration, not a quotation of any company’s rate. This page is general information, not legal or financial advice about your situation.
Your Attorney
Frank Younes
Every page on this site is written by Frank Younes, a Nebraska trial attorney with a published record of verdicts and settlements, selection to the National Trial Lawyers Top 100, and a practice that covers every county in Nebraska and Iowa. No case is handed to an associate — the lawyer you read here is the lawyer who works your case.
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Frequently Asked Questions
Is pre-settlement funding legal in Nebraska?
Yes. It is regulated by the Nonrecourse Civil Litigation Act, which requires registration with the Secretary of State and specific written disclosures. The Act does not cap the rate.
Do I have to pay it back if I lose my case?
No. The contract must state that you will not owe anything in excess of your recovery, unless you have violated the agreement.
How much does a lawsuit loan cost in Nebraska?
Whatever the contract says. The law sets no maximum. Fees compound every six months and may be charged for up to 36 months, and the contract must show the total owed at each six-month point.
Can I cancel a funding contract?
Yes, within five business days of receiving the funds, by returning them. After that there is no cancellation right.
Can the funding company decide whether I settle?
No. The contract must state that all decisions about the case and its settlement remain with you and your attorney.
Can my lawyer advance me money for living expenses?
No. The ethics rules allow a lawyer to advance court costs and litigation expenses, not living expenses.
Should I take pre-settlement funding?
I advise my clients against it. The rates are extremely high, and repaying the advance eats into the settlement, sometimes leaving little for you. Look at the alternatives first.
Related Guides
Related pages on the questions that come up next.
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