Litigation Finance or Litigation Funding is a fund provided by the third party to the plaintiff or the individual who need to finance his or her lawsuit. Litigation funding takes a payout in return for a portion of the financial recovery. It is not similar to the loan as it is non-recourse that means if the plaintiff doesn’t get any settlement and claim, then a person seeking litigation finance do not owe any litigation funding. The litigation financing is a capital provided with a legal claim that applies to the cost of litigation including court expenses, attorney fees, investigation fees, etc. If the plaintiff or claimants receive the settlement, then funder gets the payout. Here are a few things about the litigation finance that will give you a clear understanding of what litigation finance is and how it works.
1. Litigation finance is used by whom and when.
People who cannot afford the cost of litigation, can use and benefit from litigation finance. From businesses to individuals and class action to claimants anyone can use the litigation financing for their lawsuit. Even prosperous businesses or businesses of all size can take advantage of the litigation finance as it does not affect the balance sheets of publicly traded companies. Many B2B companies have the prosecution, and these costs can quickly add up to the lost capitals in the balance sheets of the companies. However, outsourcing a capital from the third party firm like litigation finance can help them reduce the risk of the lost capital from the balance sheet and maintain the stock market.
2. How do lawyers benefit from the Litigation Finance?
Litigation finance allows lawyers to take up the cases that clients cannot afford to pay the legal fees and attorney fee. Some Litigation funders also fund the entire portfolio of the cases so that lawyers can offer flexible payment arrangements for prospective clients.
3. It will cover all your litigation Expenses.
With Litigation funding, you can hire an expert attorney for your lawsuit, and the funders want you to win the case, so they will finance you to hire an expert lawyer to claim your settlements and also bear all your legal expenses.
4. It Reduces the Risk of Premature Settlement.
One of the advantages of litigation financing is that you don’t have to settle for the low compensation. It often results that claimants settle for less because they don’t have the money to finance their lawsuit. However, with Litigation funding, you don’t have to acquiesce to low-ball proposals.