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Litigation Funding Explained

Litigation Funding is an arrangement between a specialist funding company and a client (typically the claimant in a dispute), whereby the funder will agree to finance some or all of the client’s legal fees in exchange for a share of the ‘case proceeds’ (usually the recovered damages).

TheJudge is the market-leading expert in arranging litigation funding

We are experts in arranging non-recourse litigation and arbitration funding for corporates and investors 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 funding 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 litigation 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 funder 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 arrange funding for legal costs, including:

  • Lawyers’ fees
  • Disbursements (including expert reports, 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

Whilst third party litigation funding may often be the obvious starting point for lawyers and their clients considering alternative ways to fund legal fees, litigation insurance should not be overlooked as a complementary or potentially alternative way to hedge litigation risk. When used creatively, litigation insurance can significantly improve the overall litigation finance deal cost and maximise the claimant’s net recovery from successful litigation. In fact, although less well-publicised than third party litigation funding, insurance features in over 95% of the eventual arrangements put in place by TheJudge.

 

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