Fee-Free If You Lose? Understanding ‘No Win, No Repay’ Clauses and Exceptions

One of the most attractive features of many pre settlement funding agreements is the “no win, no repay” clause. On its face, this provision seems straightforward—if your case is unsuccessful, you owe nothing. In practice, however, there are exceptions and carve-outs that borrowers need to understand before signing. These clauses exist to protect both the funding company and the borrower from scenarios that fall outside the intended risk-sharing structure. Knowing where the boundaries are can help you avoid unpleasant surprises.

Carve-Outs for Fraud

Fraud is one of the clearest and most common exceptions to a no-repay provision. If a borrower is found to have intentionally misrepresented facts, concealed material information, or submitted fraudulent documents, the funding company’s risk protection disappears.

For example, failing to disclose prior liens, other funding agreements, or settlement advances from different lenders could trigger repayment obligations even if the underlying case is lost. In situations involving multiple advances, the overlap of obligations can create repayment disputes similar to those seen in stacked funding arrangements, where transparency is essential from the start.

Material Breach of Agreement

“No win, no repay” clauses also typically exclude cases where the borrower materially breaches the funding contract. This could include failing to keep the funding provider updated on key case developments, switching attorneys without notification, or refusing to cooperate with reasonable information requests.

In the funding world, cooperation between the plaintiff, their attorney, and the lender is what ensures fair terms and smooth disbursement. When borrowers maintain consistent communication—similar to the proactive attorney engagement seen in well-structured settlement agreements—they preserve the benefits of the original terms. Breaking that chain can remove the protection of the fee waiver entirely.

Appeal Financing Exclusions

A lesser-known limitation is that most no-repay clauses only apply through the conclusion of the trial or negotiated settlement phase. If a case is lost at trial but pursued on appeal, the original funding agreement often does not cover the appeal stage.

Appeals carry their own costs, risks, and timelines, requiring separate underwriting. In this context, the same valuation principles that determine how much funding a plaintiff can qualify for would be applied anew, taking into account the likelihood of reversal and the additional time involved. Borrowers should be prepared for the possibility that appeal financing may require a fresh agreement with distinct terms.

Case-Transfer Scenarios

Another overlooked exception involves what happens when a case is transferred. This could mean switching to a new attorney, moving the case to a different jurisdiction, or even merging it into a larger class action.

Case transfers can delay resolution and introduce new parties to the decision-making process, much like the complexities faced by plaintiffs in class-action settlement advances. In these situations, the funding company may reevaluate the terms—or require partial repayment—if the transfer significantly changes the case’s risk profile or timeline.

Protecting the Integrity of the No-Repay Promise

The best way to preserve your no-repay protection is to maintain full transparency with your attorney and the funding company. Disclose all prior advances, liens, or relevant changes in your case’s status. Avoid taking additional funding from multiple sources unless coordinated by your primary funder, as unmanaged borrowing can complicate lien satisfaction and undermine your final recovery.

Careful provider selection also matters. Choosing a funder that balances risk-sharing with fair fee caps—similar to the decision-making process in evaluating service quality versus lowest price—can give you confidence that your interests are protected on both sides of the agreement.

Post-Settlement Considerations

If you do win, the no-repay clause becomes irrelevant, and your focus shifts to repayment and managing your award. At this stage, plaintiffs often face decisions about whether to receive funds as a lump-sum or structured payout. Each option has unique benefits and trade-offs, as seen in post-verdict funding and settlement planning scenarios. The right choice can ensure that your recovery supports your long-term needs rather than being consumed by immediate expenses.

The Bottom Line

In the end, “no win, no repay” can be a powerful safeguard—if you understand its limits. Choosing a single, reputable funding partner who clearly explains the carve-outs, keeps terms transparent, and coordinates directly with your attorney is the best way to ensure the promise holds true. By avoiding multiple uncoordinated advances and sticking with one well-structured agreement, you protect both your financial position and your peace of mind. In legal funding, clarity at the start isn’t just a convenience—it’s the key to walking away with the settlement you deserve when your case succeeds.