The Benefits of Litigation Finance

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Getting into a lawsuit, especially if you’re the plaintiff, entitles you to seek monetary damages. Even if you have a strong case and you’re likely to win, waiting for the financial compensation after the judgment enforcement will drain your pockets. The bills are waiting to be paid, and you also need money to sustain your survival.

This is where litigation finance comes in. They help you get some financial backing as you fight for your rights and justice. No matter how much you get, these funds can benefit you throughout the entire legal ordeal.

Defining Litigation Finance

Litigation finance, or legal funding, is the process in which a company provides financial support to a party involved in a lawsuit. They are not directly affiliated with any of the parties. The company earns a share financially when the lawsuit is won.

The most common concern plaintiffs have is the lack or total absence of funds to pay for legal expenses. Litigation finance bridges that gap by providing funds to the plaintiffs to ensure that financial constraints won’t hinder legal access and benefits.

Litigation finance has two main types:

  • Consumer litigation finance: This involves single cases like personal injury. It has lower financial risks since it leans more on personal matters.
  • Commercial litigation finance: This deals with cases like commercial and contract disputes, arbitration, and enforcement campaigns. The cases are big, and the financial returns are high. Funding can be used for single or multiple cases.

The high-risk, high-reward field of litigation finance makes the whole process a gamble, but it helps you get through your worst legal battles.

How You Can Benefit from Litigation Finance

Litigation finance is a relief in legal battles. Here’s how you can fully take advantage of it:

1. Way better than bank loans

Litigation finance is a better option if you need money to cover legal payments. First, it works on a non-recourse basis. The firm only gets its return on investment if you win the case. You won’t bear the burden of paying the principal amount and interest. You don’t need to put your personal assets as collateral, either.

With bank loans, you have to pay every amount you borrowed plus the interest whether you win the case or not. The bank will seize any personal asset you put on collateral if you fail to pay.

2. Immune from interest rates

Litigation finance provides a shield from interest rate charges. The terms for funding your case would depend on the disputer’s size and strength. These factors minimize risk and give accounting benefits. Dispute funding removes operating expenses as opposed to bank loans and boosts the financial position of law firms and companies.

3. Flexible to use

Since you don’t need to pay back the money from legal funding, you have the flexibility to use it. Pay legal fees, pursue disputes, and fund operational expenses in long, high-stakes cases. Having the flexibility to spend the legal funding helps withstand low settlement offers. You can resolve legal disputes based on how strong the legal claim is.

4. Gets you the best legal team

In one way or another, litigation financing benefits both you and the firm. The company now has the power to hire lawyers from top law firms that they couldn’t afford before. This boosts their reputation in the industry and turns litigation financing into a revenue source. You’ll get the legal help you need from the lawyers to strengthen your case and eventually win it.

5. Fast application and receipt of funds

Applying for litigation funding doesn’t have to take years. It only takes a maximum of three weeks for your application to be approved. Once you decide to apply, you’re expected to follow these procedures from the litigation funding firm:

  • Get into an initial intake call. Explain your case to the funders and why you need additional financial resources to pay for personal expenses and living expenses while the case is ongoing.
  • Sign a mutual non-disclosure agreement. This legally binding agreement forms a confidential relationship between you and the lawsuit financing firm regarding access to important information.
  • Submit important documents, including the filed complaint, police reports, medical reports (if there are any), and a demand letter.
  • Receive and go over the term sheet. This document outlines the terms and conditions of an investment.

After all of the steps above have been completed, all you need to do is wait for the approval. You’ll typically get the funds wired to your account.

Final Thoughts

Litigation finance is the help you need when you’re in the middle of a lawsuit without a single penny in your pocket. The funds you get depend on your case, and you don’t have to pay the funding firm back. Win or lose, you won’t bear the burden of financial constraints as you go about your legal battle.

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