What pre-settlement funding costs, and how the price is set.

Three components appear in nearly every pre-settlement funding contract — and note that none of them is an interest rate, because this is not structurally a loan. Learn these and you can read any funder's paperwork:

• The funded amount. What you actually receive.
• One-time charges. Any origination, processing or administrative charge applied once, at the outset.
• Charges that accrue over time. The part that grows the longer the case runs. This is where nearly all of the real cost lives, and it is the component people underestimate.

Add them together at the point your case actually resolves and you have the total that comes out of your recovery. Everything else is presentation.

• How long your case is likely to run. Time is the dominant factor. A case expected to resolve within a year and a case expected to run four years are not the same risk, and the accruing component is doing the work.
• How strong liability looks. A clearly documented rear-end collision and a disputed-fault case are priced differently because one is far more likely to recover.
• Available insurance coverage. A strong case against a defendant with thin coverage may still recover little. Coverage limits are part of the risk.
• What is already claimed against the recovery. Existing funding liens, hospital liens, health-plan reimbursement claims and provider liens all sit ahead of, or alongside, an advance.
• How much you request relative to the expected recovery. Asking for a small share of a well-supported case is a different proposition from asking for most of it.

Which is the practical reason a small advance often costs less in total than a large one on the same case, and the reason we will sometimes suggest taking less than you asked for.

The California Consumer Legal Funding Act sets rules about how price must be presented in contracts it governs. It does not cap what a funder may charge — that distinction matters and is often misreported — but it does force the number into the open. This is general information rather than legal advice; how the Act applies to your contract is a question for your attorney.

• On page one. Section 6252 requires the funded amount, the itemised one-time charges, the maximum total amount that may be assigned to the funder, and a dated repayment schedule to appear on the first page of the contract. You should not have to hunt for the cost.
• Amounts, not a percentage of your recovery. Section 6253 requires the repayment schedule to be expressed as predetermined amounts at set time intervals, rather than as a share of whatever you eventually recover.
• Charges stop at 36 months. Under the Act's definitions, charges on a covered contract stop accruing after 36 months. Again — not a rate cap, but a real ceiling on the thing that grows.
• Five business days to cancel. After funding, you can cancel without penalty by returning the money within five business days.

Those four rules together are why a California contract can be compared like for like against another California contract. Use that.

Ask every funder you speak to, including us. If a company will not answer these in writing, that is your answer:

1. What is the total payoff if my case settles in twelve months? In twenty-four? In thirty-six? One number tells you almost nothing. Three tell you the shape of the deal.
2. Are charges simple or compounding? Compounding on an already-compounded balance accelerates rather than growing in a straight line, and over a multi-year case the difference is not subtle.
3. Is there a cap, and when does it apply?
4. Are there any charges beyond what is on page one?
5. What happens if my case recovers less than expected, or nothing? On a genuine non-recourse contract, nothing is owed on a loss. Get that confirmed.
6. Can I have this in writing before I sign? Yes is the only acceptable answer.

Compare offers on the total payoff at a realistic settlement date — not on the headline. A lower advertised rate on a compounding balance can cost more than a higher one that is simple and capped.

Since we are not competing on a published number, we will say the unprofitable thing. The most reliable way to reduce what funding costs you is to take less of it and take it later.

Take what covers the gap, not what you qualify for. If your case is close to resolving, waiting may beat funding outright. If it is one specific bill causing the crisis, fund that rather than a comfortable round number. And if a friend or family member can bridge you without terms, that is cheaper than anything we can offer — we would rather tell you that than have you resent the contract later.

Funding is worth its cost when the alternative is accepting a low offer under pressure, or losing something you cannot get back. It is a poor deal when it is convenience.