What 'Non-Recourse' Actually Means
A non-recourse agreement gives the lender (or funder) one — and only one — source of repayment: the asset securing the deal. In legal funding, that asset is the proceeds of your case. If the case produces nothing, the funder has nothing to collect from. They cannot pursue your wages, your home, or your bank account.
The Practical Test
If you would owe money in any scenario where your case fails to recover, the product is not truly non-recourse — and you should walk away.
Why Funders Take That Risk
They build it into the pricing. The fee reflects both the time value of money and the real probability that some funded cases will fail. Plaintiffs whose cases succeed effectively cover the cost of those that don't — which is why funding costs more than secured credit.
Watch For 'Recourse' Language in Disguise
- "In the event of dismissal, repayment is due in full."
- "Borrower personally guarantees repayment."
- Promissory notes signed alongside a funding agreement.
Any of these turns the deal into a loan. See our guide on questions to ask before accepting funding.
Sources & Further Reading
For broader context, see Cornell Legal Information Institute — entry on non-recourse debt. This article is general educational information and does not constitute legal or financial advice.
Frequently Asked Questions
Reputable agreements are. Some products marketed as 'lawsuit loans' are actually recourse loans in disguise. Read carefully.
Not under a true non-recourse agreement. Their sole remedy is the case proceeds, which do not exist if the case fails.