Third Party Funding Explained
Third Party Funding is an arrangement between a specialist funding company and a client (typically the claimant in the litigation), 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).
We are experts in arranging non-recourse litigation and arbitration funding for corporates and investors involved in legal disputes, through our rich and diverse international network of relationships within this specialised industry.
Third party 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 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 broker funding for legal costs, including:
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:
Whilst third party funding may often be the obvious starting point for lawyers and their clients considering alternative litigation finance, Litigation Insurance should not be overlooked as a complimentary or potentially alternative way to hedge litigation risk, which when used creatively 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 funding, insurance features in over 95% of the eventual litigation finance arrangements brokered by TheJudge.
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