The lawsuit loan industry is lending more than $100 million to plaintiffs in the United States each year, but at what cost to the injured and their loved ones?

This type of financing is also known as lawsuit cash advance, lawsuit financing, settlement funding, and pre-settlement financing. No matter what you call it, having the ability to take a cash advance against a pending settlement has helped thousands of people cover their costs during the litigation process. That doesn't mean it's without its risks.

lawsuit loans are typically funded by hedge funds, private investors, or banks willing to lend money to the plaintiff with the promise of a hefty return on their investment. Critics of lawsuit loans have pointed out that the legal standard obliges other lenders not to apply to this type of lending, as it is largely unregulated in most states.

The business of lending to plaintiffs emerged in the last decade, as part of a trend in which banks, hedge funds, and private investors are pouring money into other people's lawsuits. But the industry, which now lends more than $100 million a year to plaintiffs, remains unregulated in most states, free to ignore laws that protect those who borrow from other types of lenders.