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Why Use Litigation Finance?
Litigation Expenses

Includes attorney fees, expert witnesses, trial exhibits, and court fees.

 

Working Capital

Includes salaries, rent, supplies, and other business expenses.

 

Settlement Acceleration

Receive your recovery or fees from settlements up front.

 

Have questions and need more in-depth answers? See our guide to pre-settlement financing by clicking here:Questions Answered

 

Glossary of Terms

Cash Advance – A cash advance is when one party, the payor, owes, or will owe, a sum of money to another party/person to be paid out at a future date, but instead the payor pays a portion of an expected future sum earlier than the scheduled payment date. A perfect example of a cash advance is if your employer gives you an advance on your paycheck. They are giving you money ahead of when you would normally get it.  A cash advance may even be provided by a third party as a typical loan or a non-recourse loan (as defined below).

Judgment – The final decision by a court in a lawsuit or appeal from a lower court’s judgment. The word “decree” is sometimes used as synonymous with judgment.

Legal Representative – A person acting for and legally authorized to execute a contract for an individual.

Lien – Any official claim against property or funds for payment of a debt or an amount owed for services rendered.

Loan – A financial transaction where one party, the borrower, receives cash from another party, the lender, where the borrower must repay the initial cash borrowed plus accrued interest to the lender over time, usually in monthly installments. If the borrower fails to repay the amount due at the due date, the lender has recourse to seek to reclaim the amount owed.

Lump sum – A sum of money paid in a single installment.

Non-recourse – “Without recourse.” A financial transaction where the financial institution is only entitled to repayment from the profits of the project that the funds are funding, not from other assets of the recipient. In the case of plaintiff cash funding, non-recourse means that if the plaintiff receives cash funding and ends up losing their case, then they do not have to repay the funds.

Personal Injury – An injury to a person’s body or mind, as the result of an accident.

Plaintiff – The person who initiates a lawsuit by filing a complaint with the clerk of the court against the defendant(s) demanding damages, performance and/or court determination of rights.

Post-settlement funding – money being advanced after a settlement has been made but not yet awarded to the plaintiff. With the way the law is structured, it can take time for the award to come in especially if the judgement were to be appealed.

Pre-settlement funding – money being advanced to victims in personal injury or othe lawsuit cases to assist with financial strain up until the settlement

Verdict – the finding or answer of a jury given to the court concerning a matter submitted to their judgment.

Wrongful death – When a person’s death is caused by the negligent or intentional act of another person or entity.

The Benefits of Litigation Financing

Litigation financing provides a variety benefits, including not just funds, but the experience and expertise that litigation financing companies may be able to provide as well.

1. Litigation Financing Levels the Playing Field Litigation is expensive, and parties do not necessarily have equal access to justice. Often a plaintiff (the person bringing a lawsuit) does not have the money or experience to compete with the defendant (the party being sued), which frequently is a corporation with both money and experience with lawsuits. Plaintiffs sometimes cannot even afford to bring a lawsuit against a wealthy defendant. Even if the lawsuit is filed, the party with greater resources has a substantial advantage. Litigation financing can help provide the resources to put plaintiffs on an even footing with defendants, and can even provide funds for personal expenses during the lawsuit. In fact, litigation financing has a well-deserved and documented record of providing the resources that plaintiffs need to effectively pursue their claims. The record of litigation financing’s success in eliminating the disparities of parties shows that litigation financing allows plaintiffs to achieve some measure of parity with larger, well-financed defendants. Providing plaintiffs with comparable resources deprives a well-funded defendant of the ability to capitalize on the disparity in resources with tactics such as delay, overwhelming discovery, and the like. Litigation financing therefore promotes recoveries which are more closely aligned with the merits of the case. Funding is potentially available at any stage of litigation, and may also reduce the risk of premature settlement. The benefits of third-party funding of litigation is not limited to plaintiffs. Corporate legal departments and law firms are increasingly recognizing that Litigation financing can be used to manage risk and add predictability to litigation costs. Litigation financing has also recently expanded into funding entire litigation portfolios as opposed to individual cases.

2. Litigation Financing Provides Benefits Beyond Just Funding Beyond providing funding, scholars and other observers have also recognized that providers of litigation financing may also be able to offer experience and connections to legal experts which can assist a litigants facing experienced and well-funded opponent. The outcome of litigation strongly favors litigants which are regularly engaged in litigation -- including large corporations – over individuals who are rarely involved in lawsuits. Funding companies over time acquire experience and expertise, and that experience can also help plaintiffs to litigate closer to parity with experienced defendants. “By compounding the bargaining power of one-shotters . . . while decreasing the bargaining power of repeat-players (such as corporations) both of whom must cede some power to the funders, litigation funding would, in essence, transform all types of parties into different types of modified repeat players.” The benefits provided by litigation financing extend to the justice system as well. Prior to providing funding, litigation financing companies conduct due diligence regardign the merits of the case, helping to ensure that support is only available for valid cases. Litigation financing also promotes settlement by equalizing the bargaining power of the parties.