Types of Cases in Litigation Finance

First, it’s important to note that there is a difference between plaintiff and defendant litigation funding.  The market for defendant-side financing is still developing but any type of claim could be eligible for litigation finance.  Whereas, funding on the plaintiff-side is more common but can be limited based on the funder, either to cases that involve commercial damages claims or personal injury claims.

Each funder will have different qualities that they may require for a case to be a good candidate for financing.  The benefits and potential downsides have to be weighed case-by-case in addition to considering the overall value of the case.  Funders usually like to see a strong chance of winning to fund a case because that is ultimately how they will make money in return.  But financing litigation is not always all or nothing.  It is possible that an organization will offer to fund a particular percentage of a case.

For personal injury cases in particular, the value of a case can usually be determined by looking at the damages + liability + insurance.  Some damages are easily measured in monetary form, be it from surgery or some other form of medical bills.  But calculated the exact value can be difficult until you’ve stopped treating your injuries and you’ve reached maximum medical improvement.  Additionally, insurance is usually easily calculated.  Liability however, is very important; the defendant should only have to pay when it was their fault.  But it is much more difficult to calculate.

Even if the plaintiff may have large capital, the ability to link expenditures to a successful outcome may be extremely attractive.  Litigation finance can serve as an alternative to a contingent fee agreement since money is only paid back if there is a favorably outcome.  Therefore, litigation financing can be a good option for a lot of different people and for many different types of claims.

Topics:  litigation finance, alternative litigation finance, third-party funding, types of cases, personal injury cases, commercial litigation funding

 Works Cited: Westfleet Advisors, Guide to Litigation Financing (May 2015), https://www.americanbar.org/content/dam/aba/administrative/litigation/materials/2015_spring_leadership_meeting/guide_to_litigation_financing_may_2014_charles_agee.authcheckdam.pdf

 Bridgeway Legal Funding, The Guide to Pre-Settlement Advances, https://www.bridgewaylf.com/guide-pre-settlement-advances