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Is My Lawyer Allowed to Give Me an Advance on My Personal Injury Case?


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Personal injury cases take time to resolve, sometimes several years if both sides are unable to settle their differences out of court. As attorneys, we prepare our clients and do our best to restore their faith in the justice process as the days go by. One of the most frustrating things for clients is watching the bills pile up and seeing their family struggle to afford the basic necessities of life. These problems have only gotten worse during the COVID pandemic as the courts closed down and caused significant delays in people’s cases.

If you’re dealing with financial hardship as an injury victim, you may be wondering, “What are my rights? Can I switch my lawyer if my current lawyer is not giving me a loan on my personal injury case?” You may have even thought about going to a third party lender, but you’re worried that you will be rejected for a loan because of your credit score.

We will do our best to answer these questions today, though the information we provide is for general purposes only. While this article can advise you of your available options, you will need to speak with an attorney in order to decide what works for you. If you’re struggling to make ends meet while your case is pending, please speak with the lawyers of DTLA Law Group. Our attorneys can answer your questions and guide you on the right course of action for your needs.

Is it Legal for My Attorney to Give Me a Loan?

Yes, in the state of California, attorneys are allowed to give their client a loan to help them out until they reach a settlement. There’s a lot of debate over this issue, even among attorneys, so we want to make that clear right away. However, there are some very important guidelines that must be followed in order to protect the client’s rights. Unfortunately, these rules can be quite confusing and many clients come to us asking for clarification. So let’s start with the State Bar of California’s rule 1.8.5. Section (a), which says: “A lawyer shall not directly or indirectly pay or agree to pay, guarantee, or represent that the lawyer or lawyer’s law firm will pay the personal or business expenses of a prospective or existing client.”

That sounds like lawyers are forbidden from giving loans to clients, right? Well, not exactly, as you’ll see in section (b) of that rule, which reads: “a lawyer may after the lawyer is retained by the client, agree to lend money to the client based on the client’s written promise to repay the loan.”

We know it’s confusing, but what the rule essentially says is that lawyers can advance clients money for reasonable living expenses. The key word here is the word “reasonable,” which we will explain in more detail, along with other conditions that must be met in order for your attorney to give you a loan.

  1. The loan can only be used for basic necessities.

Of course, a lawyer can’t control exactly how their client uses the money, but the intention of the loan must be for reasonable living expenses, like rent, groceries, and utilities. So if a client needs the loan to purchase a house when he already has an apartment, the lawyer would have to say no. Additionally, attorneys have to decline loans for criminal matters that are not related to the injury case. One attorney is California was cited by the state board for loaning a client $50,000 to pay his bail in a separate legal matter. That client defaulted on the loan, resulting in the attorney having to pay back the entire amount, plus interest. Furthermore, he was sanctioned by the board for giving out a loan that was in violation of Rule 1.18(e).

  1. An attorney cannot pressure the client into changing lawyers with the promise of a loan.

Clients who are unhappy with their lawyers may seek advice from another attorney, and possibly transfer their case to a new law firm. During their consultation, the lawyer must be careful to not pressure the client into changing lawyers by promising an advance loan on their case. Such behavior preys on the client’s desperation, and is generally viewed as an ethics violation by the California state board. It’s also a red flag regarding the attorney’s character and how they might treat you throughout the course of your lawsuit. Having said that, you are certainly allowed to ask about advance loans during a consultation. However, the lawyer you’re speaking with should be giving you honest, helpful advice as opposed to making a sales pitch.

  1. The lawyer and client must sign off on a written contract for the loan.

Most people have heard about verbal agreements being legal contracts, but that’s not good enough in the case of attorney-client loans. According to Rule 1.8.5(b), there must be a “written promise to repay the loan” that’s signed by the client. We fully agree with this clause, which serves to protect the client’s interest, as well as the attorney’s. Your lawyer should also encourage you to have the contract reviewed by another attorney, which is not legally required. It does, however, inspire confidence in the client that the contract is fair and reasonable.

  1. The loan terms must be reasonable and clearly explained to the client.

Legal jargon can be incredibly complex at times, and it’s easy for people to misunderstand what they’re signing. That’s why attorneys must go over the loan terms in a way that’s clear to the client. This requirement is explained in Hunniecut v. State Bar: “When an attorney-client transaction is involved, the attorney bears the burden of showing that the dealings between the parties were fair and reasonable and were fully known and understood by the client.”

This duty to ensure transparency with the client includes allowing them to have the contract reviewed by a neutral third party. Before signing a loan contract with your attorney, consult the lawyers of DTLA. We will take the time to explain anything that’s unclear to you and advise you of alternative options if they’re available.

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Why is My Lawyer Not Giving Me an Advance on My Case?

By now, you know that it’s legal for your lawyer to give an advance on your case. So, why won’t they? We can’t speak for every lawyer, but some attorneys feel that loans are a conflict of interest. When a lawyer lends you money, they may feel pressured since they want to make sure you pay them back. As a result, they could push you into settling as soon as possible, even if the sum is inadequate for your needs. However, most attorneys with years of experience are confident in their ability to win a case, and less bothered by this type of insecurity.

Our attorneys, for example, fight for the full compensation value that our clients deserve. When a client settles for an inadequate award, they will struggle to pay their bills and seek treatment in the long run. They will also have trouble honoring loan payments, so it’s in everyone’s best interest to recover what the client is entitled to. Sadly, not all attorneys share our view and choose short terms gains when it comes to their client’s needs.

There is, however, another concern that legitimately comes from a good place. Some lawyers refuse to lend clients money because it could be seen as an ethics violation. We understand this idea in theory, since loans are not part of a traditional attorney-client relationship. However, there are reasons for going “outside the box” and doing what we can to make sure clients can meet basic living standards. This dilemma is recognized by the California state board as well, which is why lawyers are allowed to help needy clients at their discretion.

My Lawyer is Refusing to Talk to the Lending Company

As we stated, helping out a client financially is at the attorney’s discretion, so there’s only so much you can do if they refuse your request. Over the years, desperate clients have come to us asking, “What can I do if my lawyer won’t give my file to a cash advance company for a loan I need on my case?” Typically, these clients are referring to a lawsuit funding company, which issues loans that are paid back once the borrower wins their case. There is no credit check for these loans, since repayments are backed by the settlement award. Sounds easy enough, but here’s the problem, as we often hear from prospective clients: “My attorney refuses to talk to the company. What do I do now?”

It’s undeniably frustrating when your lawyer won’t give you an advance, yet won’t help you get a loan from someone else. However, your attorney may be worried about ethics violations regarding attorney-client privilege. This legal principle keeps all communications between you and your attorney confidential, and violating it has serious consequences for your attorney. So it’s understandable that they are reluctant to talk about your case with a third party lender. It’s also worth noting that some of these companies have lending terms that can be described as “predatory,” including incredibly high interest rates. As a result, you may be stuck with high monthly payments that you can’t honor, especially if your settlement was less that you had anticipated. It’s possible your lawyer is trying to protect you from such companies, and that’s why they’re refusing to turn over your file.

Still, we know this isn’t very helpful when you’re wondering how much longer you can pay your rent. Which brings us to another popular question: “Can I switch my lawyer if my current lawyer is not giving me a loan on my personal injury case?”

Don’t remain frustrated about your rights and legal options. Speak to one of our attorneys about what you can do if you’re struggling financially during a personal injury lawsuit.

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Can I Switch My Lawyer?

In California, you are allowed to switch lawyers if your current lawyer is not giving an advance on your personal injury case. But this, in itself, isn’t necessarily a reason to change attorneys. It’s possible your lawyer is doing a good job overall, and this is the only issue that’s been a source of contention for you. Then again, it’s hard to keep working with an attorney who won’t give you a loan, yet refuses to give your information to a lawsuit funding company. At this point, you may be asking yourself, “How can I tell when it’s time to find a lawyer that can give me an advance on my personal injury case?”

The exact timing of this decision is different for each client, but you want to act quickly if you suspect it’s time to change attorneys. First, transferring your case is easier early in the claims process, since there will be less for your new lawyer to catch up on. Second, it will be easier to negotiate a split fee agreement so that your old lawyer can be fairly compensated for the work they’ve done in your case. But a change of counsel is absolutely possible later in the case, though you should speak with another lawyer to make sure you’re doing the right thing. Our attorneys offer free second opinions where they can evaluate your case and give you an honest assessment of your attorney’s work. They can also answer any questions you have about attorney-client loans and lawsuit funding companies. Ultimately, the decision to change counsel is up to you, but we will do our best to help you make an informed decision.

Free Second Opinion

Regardless of what problems you’re facing during a lawsuit, it can be helpful to get a second opinion from another attorney. Our Zero fee guarantee provides such injury victims with a free consultation, where they can be advised of their rights and legal options. This includes the right to switch lawyers and request information about loans for living expenses until your case is settled. If you decide to transfer your case to us, you will pay nothing for our services since “We don’t get paid unless you do.” That means if we lose your case, you owe us nothing at all.

Call DTLA Law Group today and speak with one of our injury lawsuit attorneys.


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