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Litigation finance explained

Litigation funding is an arrangement between a specialist funding company and a client (typically the plaintiff, or the plaintiff’s law firm, in the litigation), whereby the funder will agree to finance some or all of the client’s legal fees and/or expenses in exchange for a share of the ‘case proceeds’ (usually the recovered damages, or in the case of law firm funding, the recovered contingency or success fee).

TheJudge is a market-leader in the litigation finance market. 

We are experts in recourse litigation and arbitration finance for corporations and investors, and their law firms, involved in legal disputes.

Litigation funders view legal claims as financial assets, in which they may invest in exchange for a return based upon the success of the funded litigation or arbitration. Litigation finance providers are able to offer a wide variety of financing options for parties seeking off-balance sheet solutions.

At its most straightforward, the third-party funder will finance the legal fees and expenses involved in pursuing the claim on a non-recourse basis, in exchange for what is essentially an equity interest in the claim. If the case is successful, the litigation finance provider recovers its capital invested plus a success fee. If the case is unsuccessful, the funder loses its investment, receives no success fee and has no recourse against the funded party.

At TheJudge, we routinely provide financing for legal costs, including:

  • Lawyers’ fees
  • Disbursements (including expert witnesses, court fees, etc.)
  • Appeal costs
  • Enforcement

In addition to financing for legal costs, we also regularly put in place other forms of financing where the legal claim is used as collateral, including:

  • Working capital for the business during the life of the claim
  • Officeholder fees and expenses
  • Advanced damages
  • Claim/award purchasing
  • Portfolio financing

While third-party funding may often be the obvious starting point for lawyers and their clients considering alternative litigation finance, Attorney Fee Insurance should not be overlooked as a complimentary or potentially alternative way to hedge litigation risk. For corporate enterprises in particular, Attorney Fee Insurance is often a far more cost-effective option to achieve certainty over the company’s budget/risk exposure.

 

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