What are basic requirements for litigation financing?
In addition to the merits of the case, the following issues are taken into consideration when assessing a potential financing:
- Likely duration
- Competency of plaintiff’s counsel
- Competency of defendant’s counsel
- Presiding judge
- Jurisdiction
- Collectability
- Defendants’ litigation track record
That said, it is difficult to finance cases that are likely to have relatively low damages and relatively high costs, because there simply won’t be room in such a case for a return investment while still providing satisfactory compensation for the claimant. The ‘rule of thumb’ in the industry is that funders will not fund more than 10% of their expected outcome, which is their view of likely damages or settlement based on a set of probability weighted outcomes.
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