In most states, your lawyer cannot loan you money for rent, groceries, medical bills, or other personal living expenses while your case is pending. What they can do is front the costs of the lawsuit itself, such as filing fees, depositions, and expert witnesses, and recover those costs out of any settlement. A handful of states allow more, and if you need cash to get through the case, pre-settlement funding from an outside company is the usual alternative.
Why Lawyers Cannot Lend Clients Money for Living Expenses
The rule comes from the American Bar Association’s Model Rule 1.8(e), which prohibits lawyers from providing financial assistance to a client in connection with pending or contemplated litigation, subject to narrow exceptions.1American Bar Association. Model Rules of Professional Conduct – Rule 1.8: Current Clients: Specific Rules Most states have adopted this rule or something close to it.
The reasoning is practical. A lawyer who has loaned you thousands of dollars becomes both your advocate and your creditor, and those roles pull in different directions. The ABA’s official commentary states that subsidizing a client’s living costs gives the lawyer “too great a financial stake in the litigation” and could encourage cases that would not otherwise be brought.2American Bar Association. Model Rules of Professional Conduct – Rule 1.8: Current Clients: Specific Rules – Comment A lawyer who broke this rule, even out of compassion, could face professional discipline ranging from private admonition to public reprimand. So when your lawyer says no, it is not because they do not care. It is because saying yes could cost them their license and put your case at risk.
What Your Lawyer Can Front for You
The same rule that blocks personal loans has an explicit carve-out for “court costs and expenses of litigation.” Your lawyer can advance these, and repayment can be made contingent on the outcome of the case. Depending on your fee agreement, if you recover nothing, you may owe nothing back.1American Bar Association. Model Rules of Professional Conduct – Rule 1.8: Current Clients: Specific Rules
Typical expenses a lawyer will advance include:
- Filing fees, which vary by court and case type and typically run from around $50 to over $400 for a civil action.
- Deposition costs, including court reporter fees, video recording, and transcripts, which can run from hundreds to several thousand dollars each.
- Expert witness fees, often several thousand dollars and much more in complex cases.
- Records and evidence-gathering costs, such as medical records, police reports, and accident reconstruction.
How Repayment Works Out of a Settlement
In a contingency fee case, the settlement check usually goes to your lawyer first. They take their percentage fee (often one-third, sometimes 40% if the case goes to trial), then deduct the litigation costs they advanced, and you receive what remains. On a $100,000 settlement with a one-third fee and $8,000 in advanced costs, you would receive roughly $58,700.
Read your fee agreement before signing. Some agreements make cost repayment contingent on recovery, meaning you owe nothing for costs if you lose. Others make you responsible for costs regardless of the outcome. Ask your lawyer directly which structure applies. This is where clients get surprised after the fact, and one conversation at the start avoids it.
Exceptions for Indigent and Pro Bono Clients
Rule 1.8(e) has two additional exceptions for clients who cannot afford to pay.
A lawyer representing an indigent client can pay court costs and litigation expenses outright, with no expectation of repayment. That goes further than the general rule, which only allows advances that may be repaid from a recovery.1American Bar Association. Model Rules of Professional Conduct – Rule 1.8: Current Clients: Specific Rules
A lawyer representing an indigent client pro bono, either directly or through a nonprofit legal services organization or a law school clinical program, can also provide modest gifts for food, rent, transportation, and medicine. This is the closest the Model Rules come to allowing personal financial help, and it carries strict conditions: the lawyer cannot promise these gifts before taking the case, cannot seek reimbursement from the client or the client’s family, and cannot advertise a willingness to provide them.1American Bar Association. Model Rules of Professional Conduct – Rule 1.8: Current Clients: Specific Rules The exception applies even if the case qualifies for fees under a fee-shifting statute.
States That Allow More Than the Model Rule
Not every state follows the Model Rule word for word. A small number of jurisdictions have adopted broader versions. Some allow a lawyer to lend money directly to a client if specific conflict-of-interest safeguards are followed and the loan terms are documented in writing. At least one jurisdiction explicitly permits financial assistance “reasonably necessary to permit the client to maintain the litigation,” which can include living expenses and medical costs. Another allows a lawyer to guarantee a loan the client needs to withstand pressure to accept a lowball settlement due to financial hardship.
These broader rules are the exception. If you are struggling financially during a case, ask your attorney whether the version of Rule 1.8 adopted in your state allows any direct help beyond litigation cost advances.
Pre-Settlement Funding as an Alternative
If your lawyer cannot lend you money and you need cash to get through the case, pre-settlement funding, sometimes called a lawsuit loan or litigation funding, is the most common alternative. A funding company evaluates your case, usually in coordination with your attorney, and offers a cash advance against your expected recovery.
The defining feature is that pre-settlement funding is typically non-recourse. If you lose your case and recover nothing, you owe the funding company nothing. That makes it different from a bank loan or borrowing from family, where you repay regardless. The funding company is betting on your case and bears the risk of a loss. You apply, the company reviews the case with your attorney’s cooperation, and if approved, cash arrives quickly. Repayment comes out of your eventual settlement.
What Pre-Settlement Funding Actually Costs
Non-recourse funding is expensive. Because the company absorbs the risk of a total loss, they charge far more than conventional lenders. Rates commonly run between 2% and 3.5% per month, which works out to roughly 24% to 42% on an annual basis at the low end. Many arrangements compound the interest, so you pay interest on previously accrued interest.
In practical terms, a $10,000 advance at 3% monthly simple interest would cost you $13,600 if your case resolves in a year. Industry data suggests the average annual cost of pre-settlement funding runs around 60%, meaning a $10,000 advance could cost $16,000 after just one year. If the case drags on, the numbers keep climbing.
A growing number of states have started regulating this industry. As of mid-2025, at least seven states had enacted laws governing litigation funding, with requirements ranging from mandatory disclosure of funding agreements to caps on how much a funding company can collect. At least one state now limits a funder’s total recovery to 25% of the gross settlement. Before signing, have your lawyer review the agreement and walk you through the total repayment obligation under different case timelines. The interest rate alone will not tell you what you actually owe.
Cheaper Options to Consider First
Before turning to pre-settlement funding, consider whether less expensive options are available. Traditional personal loans or lines of credit from a bank or credit union carry far lower interest rates, though they require repayment whether you win or lose. Borrowing from family has no interest cost but carries its own complications. Credit cards are expensive as a short-term bridge but still generally cheaper than litigation funding.
If the hardship is severe, ask your lawyer three specific questions: whether your state allows any direct assistance from counsel, whether you qualify for any public assistance programs during the litigation, and whether a legal aid or pro bono arrangement in your case could open the door to modest gifts under the pro bono exception. These conversations feel uncomfortable, but your lawyer has almost certainly had them with other clients in the same position.