What is litigation finance?
Litigation finance joins two things that have historically been thought of as separate: corporate finance and litigation. Litigation finance is the provisioning of capital, typically on a non-recourse basis, to plaintiffs to allow them to fund their meritorious litigation against defendants. The capital can be used to fund both third-party costs (court costs, expert witness costs, discovery, etc.) and legal fees and, sometimes, for corporate working capital purposes.
Litigation and arbitration claims are assets—“choses in action,” technically. They are just as much corporate assets as other intangible or contingent assets, like receivables or intellectual property. Litigation funders provide a broad range of corporate finance solutions to firms and clients engaged in significant commercial litigation and arbitration. Litigation funding can take many forms, such as:
Fund clients’ litigation fees—including full fees, partial fees, or case expenses—as plaintiff or defendant
Finance portfolios of pending litigation (law firms or corporations)
Transfer risk in contingent or conditional fee arrangements
Monetize contingent fee or conditional positions at the beginning of a case or after judgement or appeal to minimize risk or generate capital
Secure corporate debt facilities linked to a legal claim
Finance, sell, or collect uncollected judgements
Secure litigation-related insurance and risk solutions
Accelerate receipt of fees
Some litigation funders also provide direct loans to qualified law firms.