Litigation funding, also known as litigation finance or third-party litigation funding, is a financial arrangement where a third party, unrelated to the lawsuit, provides capital to plaintiffs or law firms to cover legal costs. This funding can be used for attorney fees, court fees, expert witness fees, and other litigation-related expenses. In return, the funder receives a portion of the settlement or judgment if the case is successful. If the case is lost, the plaintiff typically owes nothing, making it a non-recourse funding arrangement.
This innovative financial tool has become increasingly popular as it allows individuals and businesses to pursue justice without the burden of upfront legal fees. Litigation funding can level the playing field, particularly in cases where plaintiffs are up against well-funded defendants. It not only provides access to legal representation but also enables plaintiffs to manage financial risk more effectively.
Moreover, litigation funding is not limited to individual plaintiffs. Businesses, including small and medium-sized enterprises, can also benefit from this arrangement. It helps them manage cash flow and allocate resources more efficiently, ensuring that legal disputes do not hinder their operations.
Litigation funding has grown into a sophisticated industry with various litigation funding companies specializing in different types of cases, such as commercial litigation funding, class actions, and intellectual property disputes. Funders conduct thorough due diligence to assess the merits of each case before providing funding, en