The Benefit of Litigation Finance at the Appellate Level

Even while litigation financing is booming and expanding in the U.S., its purview is still rather limited.  Most people view alternative litigation finance as an option in the beginning stages of a case where a financier receives the complaint and some discovery and decides to invest or not invest from the start.  However, that is not the only time to invest in a case.  In fact, some funders will require that the litigation has been on going for a specific period of time before they will get involved.

Even if there is no prerequisite time period for a financier, many people only consider litigation finance at the trial level and often overlook the benefit of litigation finance at the appellate level.  Winning a trial is very exciting but often takes time and drains resources.  Therefore, when it comes to an appeal it can be helpful to have the assistance of third party funding.  The use of litigation finance at this stage in litigation may lessen the risk for the client or law firm and may be able to provide some security of the winning award from trial.

For individual plaintiffs, it may be an option to monetize all or part of what was awarded at trial.  An arrangement like this may be in the form of a non-recourse an arrangement.  Meaning that if on appeal the verdict is overturned, the financier receives nothing and the client keeps the investment.  However, if the verdict is upheld on appeal than the financier would receive the investment back in full in addition to a negotiated return on the investment while the client would keep the rest of the award.

For a law firm, the process is likely to be similar.  It may be possible to monetize part or all of a law firm’s contingency fee after the trial but before an appeal.  Just like with the claimant’s advance, it would usually be a non-recourse agreement where the firm would only repay the investment plus negotiated return if the decision is upheld on appeal.

However, just like litigation finance agreements during trial there is due diligence that must be done before agreements can be made.  Usually due diligence would include considering discovery, the trial record, reviewing briefs of the relevant legal issues, and discussing the case with the appellate counsel.  Based on the results of due diligence, a litigation funder will be able to understand the risk profile of taking the case.

Topics:  litigation finance, alternative litigation finance, third-party funding, appellate cases, legal appeals

Works Cited: Litigation Finance at the Appeals Stage, Burford Capital (February 27, 2014).

TownCenter Partner Team

TownCenter Partners, LLC lead Asset Manager is Mr. Roni A. Elias. From modest beginnings, and with the help of a hand-picked dream team of professionals we have built one of the most dynamic and fastest growing companies in the country. TownCenter Partners LLC(TCP) is a real estate partner and master-planner providing development, leasing, management, and third party services. The company’s demonstrated ability to apply big ideas in creative and innovative ways has played a defining role in the firm’s success. Yet, TCP's most important insight has been the core understanding that it is not sight lines or site plans, but human activity, that defines a space and creates a place.