1. Understanding Litigation Finance
What is litigation finance?
Litigation finance, also known as third-party funding or dispute finance, involves providing capital to claimants, law firms, or businesses to cover legal expenses. This funding is non-recourse, meaning repayment is only required if the case is successful.
How does litigation funding differ from a loan?
Unlike traditional loans, litigation funding is non-recourse. This means that if the case is lost, there is no obligation to repay the funder. In contrast, loans require repayment regardless of the case outcome and often include interest payments.
What are the benefits of using litigation finance?
Litigation finance offers several advantages:
- Provides access to capital without taking on debt.
- Helps plaintiffs and law firms pursue cases without the financial burden.
- Frees up internal resources for companies, allowing them to focus on core operations.
- Provides flexibility to resist low settlement offers, leading to potentially higher recoveries.
What types of cases are suitable for litigation funding?
At LawGrowth Partners, we provide funding for a variety of commercial litigation cases where substantial financial resources are required to achieve a fair resolution. Our primary focus includes:
- Personal Injury Claims: We support cases such as medical malpractice, premises liability, and severe car accidents.
- Intentional Torts: These include cases of assault, battery, sexual harassment, elder abuse, and fraud.
- Mass Torts: We fund large-scale litigations involving multiple plaintiffs, often related to product liability or environmental harm.
- Commercial Litigation: We provide funding for high-stakes disputes between businesses, including contract disputes, business torts, intellectual property claims, and international arbitration.
- Class Actions: Support for large-scale class action lawsuits, particularly in cases involving consumer protection, securities litigation, and environmental claims.
- Employment Disputes: Funding for cases involving wrongful termination, workplace discrimination, and wage disputes.
- Strict Liability Cases: This category covers situations where businesses or individuals are held liable for harm caused by defective products or dangerous activities, regardless of fault.
- Contract Disputes: Supporting companies in pursuing or defending breach of contract claims to protect their business interests.
- Complex Litigation: This includes multi-district litigation, high-value commercial disputes, and claims requiring substantial expert involvement.
2. Types of Litigation Funding
What is consumer litigation funding?
Consumer litigation funding involves non-recourse funding to individuals pursuing personal injury or other consumer-related claims. Funding amounts are typically smaller, and may range from $2,000 to $100,000 or more, and are repaid only if the case is successful.
What is commercial litigation funding?
Commercial litigation funding is used to finance high-stakes commercial disputes, often involving companies or sophisticated claimants. It includes cases such as contract disputes, intellectual property litigation, and international arbitration, with funding amounts typically in the multi-million-dollar range.
What is single-case financing?
Single-case financing provides capital to cover legal expenses for a single lawsuit or arbitration. This can include costs for legal fees, expert witnesses, and other expenses necessary to pursue a meritorious case.
What is portfolio financing?
Portfolio financing involves funding multiple cases for a law firm or corporation under a single agreement. This type of funding spreads risk across several cases and allows recovery from any successful case in the portfolio.
What is multi-party or class action financing?
Multi-party financing supports legal actions involving a group of plaintiffs with similar claims, such as class actions. This type of funding is commonly used in jurisdictions where class actions are more prevalent.
3. Application and Funding Process
How do I apply for litigation funding?
The application process generally involves:
- Step 1: Initial consultation to discuss your case.
- Step 2: Submission of case documents for review.
- Step 3: Evaluation of case merits and potential value.
- Step 4: Approval and funding disbursement if the case qualifies.
What information and documentation is needed for the application?
LawGrowth Partners typically require:
- Details about the case and legal strategy.
- Information on the parties involved.
- Financial estimates of the legal costs.
- Contact details for your legal counsel.
How long does the approval process take?
The approval process can take minutes, hours, or even several days, depending on the complexity of the case and the promptness of providing the necessary documentation.
Will my information remain confidential?
Yes, we prioritize confidentiality. All information shared during the funding process is protected by a strict confidentiality and non-disclosure agreements (NDA).
4. Repayment and Financial Considerations
What happens if my case is unsuccessful?
If your case does not result in a favorable outcome for you – you owe nothing. Its that simple. Our funding is non-recourse, so there are no repayment obligations if the case is unsuccessful.
How is the repayment amount determined if the case is successful?
Repayment is based on a pre-agreed percentage of the recovery amount from the settlement or judgment. This is clearly outlined in the funding agreement.
Are there any upfront costs or hidden fees?
No, there are no upfront costs or hidden fees. We operate with 100% transparency and all terms are clearly stated in the funding agreement.
Will litigation funding impact my credit score?
No, since litigation funding is not a loan, it does not affect your credit score.
Are there tax implications with litigation funding?
Tax implications can vary depending on your jurisdiction. We recommend consulting with a tax professional to understand any potential consequences that may affect you.
5. Working with LawGrowth Partners
Does the funder control my case?
No, you and your legal team maintain full control over all case strategies and decisions. Your lawyer remains entirely independent throughout the process. Our role is solely to provide financial support; we do not influence or interfere with your legal strategy.
Can I obtain funding for multiple cases as a law firm?
Yes, we offer portfolio funding solutions for law firms and corporations handling multiple legal disputes.
What is the due diligence process like?
Our due diligence process is simple – it merely involves evaluating the merits of your case, the potential damages, and prospects of recovery. This process helps us determine the suitability of funding and usually happens very quickly.
How is funding monitored after approval?
We take a hands-off approach, only checking in periodically for updates on major case milestones. You retain full control over all legal decisions, with our role strictly focused on providing the financial support you need.
6. Benefits of Using Litigation Finance
How can litigation finance unlock value for my business?
Litigation funding can help businesses:
- Pursue meritorious claims without impacting cash flow.
- Convert legal departments from cost centers to revenue generators.
- Free up capital for other business priorities by covering legal expenses.
How does litigation finance provide flexibility?
The non-recourse nature of litigation finance allows claimants to:
- Fund legal costs without debt obligations.
- Deploy capital for various needs, including operational expenses during long legal battles.
- Resist low settlement offers, thereby maximizing potential recoveries.
What is the impact of rising interest rates on litigation finance?
Litigation finance is not affected by rising interest rates since it is not a loan. The terms are set based on the strength of the case, not on fluctuating interest rates.
7. Practical Considerations
Can litigation funding speed up the resolution of my case?
While litigation funding itself does not accelerate legal proceedings, it can reduce financial pressure, allowing plaintiffs to pursue a stronger case without settling prematurely due to cash flow constraints.
Are litigation funders involved in settlement negotiations?
No, as passive investors, LawGrowth Partners does not control or influence settlement decisions. However, we may provide non-binding advice only if requested in writing by the claimant or their legal team.
What is a term sheet, and why is it important?
A term sheet is a preliminary agreement that’s part of the funding agreement, which outlines the key terms and conditions of the proposed funding. It helps both parties align expectations before entering into a binding contract.
Do you fund cases outside of the United States?
No. Not at this time.
How does litigation funding align interests between the funder, claimant, and attorneys?
Our funding structures are designed to align incentives by sharing risks and rewards. This often involves contingency arrangements where attorneys work independently and earn a share of the case’s upside. This ensures all parties are motivated to achieve the best outcome.
Ready to See If Litigation Funding Is Right For you?
We’re here to help. Contact us now to schedule a consultation with one of our legal finance representitives.
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