What Should A Potential Client Look for in a Litigation Financer?
What should clients look for when they are trying to obtain litigation financing? As the industry of litigation financing continues to grow, knowing which funder to choose becomes increasingly important. According to a select group of financers, there are two main considerations that potential clients should ponder before choosing a financer to finance their case. The first consideration that must be accounted for is the fit of their claim with the portfolio of cases that the financer generally finances and the next is their relationship with the financer. However, according to a select group of prospective clients, the two main considerations that they take-into account when choosing a financer is the speed of which their financing can be completed and the amount of flexibility in their deal structure.
The selected group of financers believe that the fit of the claim is important because not all financers handle every type of case and some only handle some types cases of certain clients, exclusively. First, if a financer does not handle the type of case that is presented, it would be fruitless to pursue funding with that financer because they likely will outright reject to finance the case even after doing their due diligence because it is incredibly risky for them to venture outside their comfort zone. Second, if a financer does not handle the type of client that you are, then it would also likely prove useless to pursue financing for the same reason. However, if the fit is correct, then the relationship between the financer and the client is the next most important consideration to evaluate in the eyes of financers.
Next, the relationship between the financer and the client is important because it determines how the parties will treat each other as time progresses. Trust, respect, and professionalism are all incredibly important for a healthy, communicative relationship between the financer and the client and if none of this exists, no party to the agreement will ultimately be happy.
Unlike the selected group of financers, a selected group of prospective clientele state that the speed at which the financing can be made available is incredibly important. If the financing is not made available quickly, the client could suffer irreparable harm. For instance, they could lose their business, home, have to put off a surgery, or worse, lose their case.
Lastly, the flexibility in the structure of the deal is of critical importance according to the group of selected clients. This is because the flexibility of the deal will determine how all party receives their payment and if there is any “wiggle room”. Additionally, there are many different ways that a deal can be structured. Some are more advantageous or preferable to a client in terms of flexibility. If the structure of the deal does not offer the amount of flexibility that is needed for the client, they will feel like they aren’t receiving a fair deal and are likely to leave.
Keywords: Client, third-party financing, flexibility, speed, relationship, fit
Work Cited: David Lat, What Should Lawyers Look for in Litigation Financing? Above the Law (April 9, 2019)
