Fee Financing Versus Litigation Funding

Clients and lawyers sometimes use the two terms interchangeably, but they work very differently. The ABA’s 2020 best practices report on third-party litigation funding addresses funders who provide money, usually on a non-recourse basis, in exchange for an interest in the potential recovery. Fee financing is a loan to the client, repaid on fixed terms, with no stake in how the case turns out.

Disclosure rules vary by court. Terms and availability of each option depend on the provider.

The difference shows up in court rules too. The District of New Jersey’s Local Civil Rule 7.1.1 requires disclosure of non-party funding provided on a non-recourse basis in exchange for a contingent financial interest in the result, and the federal Advisory Committee on Civil Rules has a subcommittee studying litigation funding disclosure. Those rules target outcome-based funding. A client’s recourse loan to pay your fee generally falls outside them, though it’s worth checking the local rules wherever you practice.

Which Civil Cases Clients Pay for by the Hour

Contingency fees are most closely associated with personal injury and some employment claims. Many other civil matters are billed hourly, and those are the clients who may need another way to pay:

Fee arrangements vary by firm and jurisdiction.

Defendants have the least room to wait. In federal court, Rule 12(a) gives a defendant 21 days after service to answer, or 60 days if they waived service. In California, the summons gives a defendant 30 days after service to file a response. A defendant who misses the deadline risks a default under Rule 55 or the state equivalent, and if their homeowner’s or business insurance doesn’t cover the claim, the retainer comes out of their own pocket.

Plaintiffs end up paying by the hour too when the case is mainly about an injunction, a contract, or property rather than a large damages award, or when the damages are too small for a contingency firm to take on.

Sometimes a family member or business partner helps with the fee. ABA Model Rule 1.8(f) applies whenever someone other than the client pays: the client gives informed consent, the person paying doesn’t interfere with your judgment, and confidential information stays protected.

What Civil Litigation Costs Individual Clients

When a case is billed hourly against a retainer, the total depends on how far it goes before it settles or is decided. These are general ranges for what individual clients commonly pay:

General estimates. Fees vary by state, court, the firm’s hourly rates, and how contested the case is. Costs for experts, depositions, and filing fees are usually billed separately.

Financing covers your fee. Court costs and litigation expenses are a separate question: Model Rule 1.8(e)(1) lets a lawyer advance them, with repayment that may depend on the outcome, so a firm can handle costs that way and finance only the fee.

The stakes can also run higher than the client’s own bill. Some contracts include a prevailing-party fee clause, and some states make those clauses work in both directions. California’s Civil Code §1717 entitles the party who prevails on the contract to reasonable attorney’s fees whether or not the clause named that party. A client who goes unrepresented, or runs out of money partway through, risks paying the other side’s fees as well as losing the case.

The first retainer may not be the last. As discovery and motion practice draw it down, the client can apply for financing on each replenishment request, or on a balance that has already fallen behind. If a lender approves it, the lender pays your firm in full, typically within 48 hours of the loan funding. For clients considering an appeal after judgment, see our appeals financing page.

Offering Financing at the Case Evaluation

Consider mentioning financing when you quote the retainer, alongside paying in full. Put the application link in your engagement letter, in the follow-up email after the consultation, and on each replenishment invoice, so the client can apply from any device when the request arrives.

Legal Financing Solutions is an online lending marketplace, so the application goes to more than one lender in prime, near-prime, and subprime credit tiers. Underwriting looks past the credit score to current income, employment, and bank account cash flow, which helps a client whose credit has taken a hit from the same dispute that brought them to you.

Is Civil Litigation Attorney Financing Ethical?

Yes. ABA Formal Opinion 484 addresses arrangements in which a client borrows from a finance company to pay the lawyer’s fee, and says lawyers may help clients use them, provided the fee is reasonable, the client understands the arrangement, confidential information is protected, and the lawyer’s own interests don’t drive the recommendation.

Civil Litigation Attorney Financing FAQ

Start Offering Civil Litigation Attorney Financing

Being sued, or needing to sue, is rarely something people plan for. A tenant served with a complaint or a homeowner who has run out of patience with a contractor has a deadline, a retainer to pay, and sometimes no savings set aside for either. When the retainer is more than they have on hand, some of them try to represent themselves, and the case can get harder for everyone after that.

Civil litigation attorney financing gives those clients a way to retain you now and pay over time, while your firm is paid by the lender and isn’t left carrying the balance through discovery. Request a demo and we’ll show you what the client sees when they apply, how lenders review the application, and how payment reaches your firm.

1. Baker Botts L.L.P. v. ASARCO LLC, 576 U.S. 121 (2015), Justia
2. Best Practices for Third-Party Litigation Funding (Report 111A, August 2020), American Bar Association
3. Local Civil Rule 7.1.1, Disclosure of Third-Party Litigation Funding, U.S. District Court for the District of New Jersey
4. Advisory Committee on Civil Rules, Agenda Book (May 2026), U.S. Courts
5. Federal Rule of Civil Procedure 12 and Rule 55, Legal Information Institute
6. Cal. Code Civ. Proc. §412.20 and Cal. Civ. Code §1717, California Legislative Information
7. ABA Model Rule 1.8, Current Clients: Specific Rules, American Bar Association
8. ABA Formal Opinion 484, American Bar Association (2018)
9. Ethics Opinion Offers Guidance on Lawyer Fee Financing, ABA Journal