In the world of personal injury law, Letters of Protection (LOPs) remain a critical tool—allowing clients to access necessary medical care without upfront cost by promising payment from future settlement or judgment proceeds. In 2025, law firms must not only recognize the benefits of LOPs but also address evolving risks, ethical considerations, and alternatives emerging in litigation financing.
An LOP is a contract in which a plaintiff, through their attorney, guarantees payment for medical treatment from future settlement proceeds. It enables injured clients—often with limited insurance—to receive treatment immediately, while medical providers record liens for later payment. Properly executed, it's a legally binding arrangement that helps strengthen case documentation and settlement positioning.
However, misuse brings serious risks. Some providers charge inflated fees because LOP holders aren’t bound by regulated rates, which can skew economic damages and weaken credibility.
LOPs can result in inflated medical charges far above typical insurer rates—raising red flags for defense counsel. In many states, such practices complicate case valuation and defense strategies.
In Texas, courts allow discovery into LOPs to demonstrate possible artificial bill inflation.
Attorneys must ensure that LOPs are used prudently. One Ohio ethics opinion reminded lawyers that LOPs present both legal and ethical considerations—especially regarding oversight and fulfilling obligations upon receipt of settlement proceeds.
Litigation funding—another tool providing upfront capital to law firms or clients—has snowballed, with projections of over $18.9 billion dedicated to litigation funding in 2025.
In response, states like Georgia enacted legislation regulating TPLF, requiring transparency around funding arrangements. This trend signals mounting expectations for disclosure across all alternative funding mechanisms—LOPs included.
PSF offers advance payments to clients or firms to manage expenses, reducing reliance on LOPs and spreading financial risk. Learn more here.
Strong lien management systems ensure providers are paid at settlement, maintain transparency, and avoid billing disputes.
Combining LOPs with PSF lets clients access care while protecting law firms from cash flow constraints and ethical hazards—especially if the PSF includes disclosure-friendly terms.
In 2025, LOPs remain a powerful tool—but only when wielded with intentional strategy, ethical vigilance, and modern foresight. As litigation funding regulation tightens and scrutiny rises, law firms that rethink how they use LOPs—by aligning with client needs, maintaining transparency, defending medical liens, and exploring hybrid funding strategies—will stay ahead. Empower clients while protecting your practice: rethink how LOPs can work smarter for everyone involved.