For decades, contingency-fee personal injury firms have carried the financial burden of case expenses on behalf of their clients. It has long been the industry’s “status quo”: firms advance the costs necessary to build case value—expert witnesses, depositions, accident reconstruction, life-care planners, medical imaging, mediations, investigators, and the countless ancillary expenses that go into preparing a file for negotiation or trial.
Although 99% of firms do this, it is important to remember one thing:
There is no fiduciary obligation requiring contingency firms to fund these case expenses.
Firms have simply had no realistic alternative. Plaintiffs cannot afford these costs themselves, and without investing in the evidence and experts, the firm cannot properly develop damages or liability. As a result, firms—large and small—have been forced into the role of both advocate and financier.
Today, that model is hitting a breaking point.
Tort Reform Is Reshaping the Risk Profile of Personal Injury Firms
Recent waves of tort reform across many states are causing seismic changes in how long cases take to resolve and how many are being pushed into litigation or trial. The repercussions are already showing:
- Cases Are Taking Longer to Settle
Tighter evidentiary rules, caps, and procedural changes mean defense carriers have more leverage and fewer incentives to settle early. What once settled pre-litigation in 6–12 months may now stretch 18–36 months—or longer.
- More Cases Are Being Forced Into Litigation
Carriers are strategically “waiting out” plaintiff firms, increasing the volume of cases entering discovery. This drives up both cost and time before resolution.
- More Trials on the Horizon
When settlement value is artificially capped or limited, plaintiffs are increasingly forced to take their cases to trial to obtain fair compensation. Trial budgets can balloon into six figures, even for mid-level cases.
The result? Case expenses are rising while the timeline to recover them widens.
The Cash Flow Burden Is Becoming Unsustainable
Even one well-developed case can require tens of thousands of dollars in expenses. Multiply that across:
- dozens of active litigation matters,
- hundreds of pre-litigation cases, or
- thousands of open files in a growing firm,
…and the financial strain becomes staggering.
Meanwhile, the cost of running a practice continues to climb:
- marketing and digital advertising
- salaries and benefits
- legal talent retention
- case management infrastructure
- compliance
- referral fees
- operational overhead
When case timelines extend and out-of-pocket case costs increase, cash flow constricts. That constraint becomes a barrier to growth—sometimes even survival.
For small firms, new firms, or regional firms looking to scale, this pressure is even more acute. Traditional banking is rarely an option:
- Banks avoid lending against contingent receivables.
- Underwriting requirements are onerous.
- Capital lines are capped far below what firms actually need.
- Collateral and personal guarantees create unacceptable risk.
In short, the industry has a financing problem at the exact time it needs flexibility the most.
Why Litigation Financing Is Becoming the Future of Contingency Law
The solution is emerging: access to capital designed specifically for contingency-fee law firms.
Litigation financing—when structured correctly—provides firms with:
- Capital without restrictive bank covenants or personal guarantees
- Funding tied to case assets, not traditional collateral
- Scalable access as caseload grows
- Smoother cash flow, even with prolonged litigation timelines
- Freedom to invest in marketing, staff, and case development
- Reduced financial dependency on the firm’s partners
Most importantly, litigation financing allows firms to:
Invest fully in their cases without jeopardizing the firm’s stability
This is critical. When firms are under financial pressure, it becomes harder to staff, litigate, and ultimately maximize case value. Financing ensures that cases receive the resources required—without forcing the firm to shoulder the full, immediate financial impact.
The Industry Is Entering a New Era
Contingency law firms have reached an inflection point. Tort reform, inflation, longer litigation timelines, and rising costs create a perfect storm that no longer aligns with the outdated expectation that firms should personally fund every case expense.
The profession needs a structural shift.
Access to flexible, purpose-built litigation capital is that shift.
It empowers firms to grow, manage larger caseloads, and continue serving clients at the highest level—without the crushing financial burden that the old model imposes.
The future of contingency practice belongs to the firms that modernize their financial strategy. Litigation financing is no longer optional; it is quickly becoming the standard solution for sustainability and long-term success.
