3min read
Most attorneys agree that legal financing can be a game-changer for their clients. It gives plaintiffs the financial support they need to stay patient while waiting for a fair settlement. But there’s a common issue: clients often forget about the cash advances they received earlier from a financing company. This can lead to frustration when they realize their final payout isn’t what they expected.
As frustrating as this can be for attorneys, it makes perfect sense from a behavioral standpoint. People tend to think of money differently depending on how they receive it. For example, we might treat our income cautiously but spend a tax refund like it’s bonus cash. The same thing happens with legal financing. Clients often think of cash advances as separate from their settlement, which leads to disappointment when the final numbers are tallied.
So, how can attorneys help clients avoid this problem? By setting clear expectations from the start. Here are some practical tips to guide the conversation and keep clients informed throughout the process:
1. Prevent Over-Financing
Most legal financing companies won’t advance more than 10% of what they estimate a case is worth. This ensures that clients still walk away with a significant portion of their settlement. Help your clients stick to this standard by discussing the potential settlement value and what percentage makes sense for their situation.
2. Make the Cash Advance Real
When a client receives a cash advance, ask them what they plan to use it for. Tying the money to something concrete—like paying for a medical bill—makes it more memorable. You can also remind them later: “Remember that $5,000 you used for your surgery deductible?” Keeping these details top of mind helps clients understand where their money is going.
3. Remind Them About the Trade-Off
It’s important to remind clients that the money they get from legal financing reduces their final payout. Simple reminders, like “Remember, the cash advance will affect how much you receive at settlement,” can help them avoid surprises later on.
4. Be Clear in the Closing Statement
When it’s time to close the case, be sure to clearly note how much money your client has already received from legal financing. Including this in the final breakdown will jog their memory and ensure they understand that the total includes both the settlement and any advances they’ve received along the way.
By following these steps, you can help your clients stay informed, reduce surprises, and ensure they leave with a clear understanding of their financial situation. Legal financing is a valuable tool when used properly, and setting the right expectations can lead to happier clients—and fewer headaches for you.
