This article was originally published by ARC Legal Funding , an organization established to preserve consumer legal funding as a choice for Americans who are in financial need. Republished here with permission.
Consumer Legal Funding (CLF) represents a powerful example of how free market principles can provide individuals with financial freedom and economic stability during some of life’s most difficult challenges.
When consumers face an unexpected injury or legal claim, the financial stress of paying rent, covering utilities, and keeping food on the table can force them into “forced settlements”– accepting far less than what they deserve simply to survive. CLF steps in as a private-sector solution, offering typically a few thousand dollars on potential settlements so consumers can maintain stability while their cases move through the courts.
The Free Market at Work
The free market thrives when supply meets demand in a way that benefits both parties.
- Voluntary Exchange: Consumers voluntarily enter into agreements with funding companies; no one is forced into a transaction.
- Pricing Reflects Risk: Just as banks charge higher rates for higher-risk borrowers, CLF pricing reflects risk in cases that may take years to resolve and may result in no recovery at all.
- Competition Spurs Consumer Benefit: Multiple providers operate across the United States, giving consumers options and driving innovation in pricing, transparency, and customer service.
Promoting Financial Freedom
Financial freedom is not simply about wealth; it is about independence and the ability to make choices without coercion.
CLF helps consumers in three keyways:
- Avoiding Coerced Settlements: Without funding, many consumers feel forced to accept low settlement offers simply to cover rent or other household bills. CLF enables them to wait for a fair resolution, thereby exercising true autonomy over their legal claims.
- Preserving Household Stability: Fundings are used for essential living expenses–not for legal fees or litigation costs. This ensures families can keep the lights on, or buy groceries while they recover from injuries or lost wages.
- Empowering Consumer Choice: Unlike government assistance, CLF does not dictate how funds must be spent. Consumers, not bureaucrats, decide how best to use their funds. This respects individual judgment and promotes personal responsibility.
Contrast With Government Intervention
Critics sometimes argue that consumers in distress should turn to government safety nets. But public programs come with drawbacks:
- Limited Eligibility: Many working families fall into the “gap”–earning too much to qualify for aid but not enough to withstand months or years of litigation delays.
- Taxpayer Burden: Public programs rely on taxpayer funding, spreading costs across society regardless of usage. CLF, by contrast, is entirely privately funded.
- Bureaucratic Delays: Government assistance is often slow and cumbersome, whereas CLF providers can deliver funds within days.
Addressing Misconceptions
Some opponents conflate consumer legal funding with commercial litigation financing, which funds multi-million-dollar corporate lawsuits. The distinction is critical:
- Consumer Legal Funding: Small-dollar funds to individuals for living expenses.
- Commercial Litigation Funding: Multi-million-dollar financing arrangements to fund the litigation itself.
Moreover, in states that regulate CLF, statutes explicitly prohibits the money from being used to fund litigation. Instead, CLF supports lives, not lawsuits. This distinction underscores CLF’s role as a consumer product rooted in personal freedom, not as a litigation strategy tool.
Evidence From Regulated States
States that have enacted regulations for CLF–such as Ohio, Oklahoma, Utah and Nebraska–demonstrate how consumer protection and market freedom can coexist. Statutes in these states:
- Prohibit funders from interfering with legal strategy.
- Require plain-language contracts.
- Ensure consumers retain full control over settlement decisions.
Importantly, there is no evidence that CLF drives up insurance rates, increases litigation costs, or harms the broader economy. Instead, it has provided thousands of families with financial breathing room when they needed it most.
CLF as an Engine of Economic Justice
Economic justice means ensuring that ordinary people have the tools to stand on equal footing in the marketplace and legal system. By providing liquidity to consumers at their most vulnerable moment, CLF:
- Levels the playing field between injured individuals and large insurance companies.
- Promotes fairer outcomes in settlements.
- Prevents “distress sales” of legal claims.
This aligns with free market ideals: competition, fairness, and empowering individuals to act in their best interests.
Conclusion
Consumer Legal Funding is a free-market solution that empowers consumers with financial freedom. It operates without taxpayer subsidy, without litigation interference, and without coercion. It reflects the very best of capitalism: voluntary exchange, risk-based pricing, and consumer choice.
At its core, CLF is about survival and self-determination. It ensures that no individual is forced to give up their rightful claims simply because they cannot afford groceries or rent while waiting for justice. By preserving household stability and promoting autonomy, CLF is not just a financial product–it is a pathway to freedom
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Oasis provides pre-settlement funding, also known as consumer litigation funding, to its customers through different products depending on their state of residence or cause of action. Many consumers will be provided pre-settlement funding in the form of a purchase agreement, which assigns a portion of the pending proceeds from their legal claim. Other consumers, such as those in CO, CT and SC will be offered a funding in the form of a pre-settlement loan, sometimes referred to as a lawsuit loan. These transactions have important differences, therefore, consumers should carefully review and be aware of the type of transaction that is offered to them by any funding company.