Where Do Litigation Costs Come From and How Does Litigation Finance Help

Since the recession in 2008, litigation costs have only spiraled upward with billing rates at top law firms increasing by 3-4% per year.  But attorney-billing rates are not the only costs in litigation.  In fact, as technology continues to grow and change the way we do everything the volume of e-discovery has greatly increased.  Including much more cross-border e-discovery now which adds more costs.  Beyond discovery, there are travel costs, experts’ costs, trial consultants, and even more.  But for many of people who have not previously gone through litigation it is hard to understand where these costs come from and to have a realistic view of what it really will take to fight a suit. That’s where this post serves to break down the stages of litigation and explain a little of what each costs.

From the start there is usually an intake or case assessment.  This requires fact investigation to determine the merits of a potential claim and possibly extensive legal research on the merits of potential claims.  Attorneys may also give a cost estimate at this stage of the case, which by itself requires detailed attention, time and analysis by attorneys.  All of the hours spent researching and analyzing at this point will at up to significant money, especially when consider that top partners billable rates are on average $875/hour or more.

If the claim is thought to be worthwhile the next stage is filing a complaint. This stage requires more time to write sometimes over a hundred page complaints, usually defending off a motion to dismiss, and attending hearings, which not only take time but also can add up travel costs if the case is a cross-border matter.  At this time a plaintiff lacking enough funds may have to withdraw their claim entirely or face a default judgment.

The case then moves onto discovery, which as discussed above has seen some of the biggest increases in cost with technology.  But this is also not an area that a plaintiff can try to save money on and do less of because facts that go un-discovered may adversely affect the result of the case. This stage also includes depositions, or examinations of witnesses under oath, which is likely to include travel costs, hours of preparation, court reporters, possibly video equipment, and possibly translators.

Lastly, there is the actual trial, this is a stage that numerous cases do not even make it to.  More often than not, cases settle because plaintiffs lack the resources to continue or are burnt out from the process.  But sometimes settlements do not allow for true justice to be served, particularly when a defendant knows the plaintiff is out of money and low-balls a settlement just to end the matter. If a trial does go to trial it is very costly with expert witnesses, travel, and time.

This is where a well-capitalized plaintiff using litigation finance can greatly help himself or herself.  To not only level the playing field against multinational corporations that have a multitude of resources to put towards fighting litigation, but also to improve his or her chances of eventual recovery when this is all over.

Topics:  litigation finance, alternative litigation finance, third-party funding

 Works Cited:  Matthew Oxman, Litigation Finance: The Advantages of a Well-Capitalized Plaintiff, LexShares (July 19, 2017).