Over the past few years litigation funding has developed to become an increasingly popular method for businesses to pursue claims that might otherwise have been left unrealised due to the costs of formally seeking a settlement through a formal dispute process including arbitration, court or treaty case.
What is Litigation Funding?
Litigation Funding, which is also known as legal financing or third-party funding, is the provision of financing one party in a litigation in return for a percentage of any benefits received by the litigant. It enables a party to litigate or arbitrate without having to directly pay for it, whether because of commercial restraints or because they prefer to use their liquidity in other areas.
Litigation funding provides:
• A valuable means of access to justice for claimants who may not have funds available
• A cost-effective financing tool for claimants.
Advantages of Litigation Funding
Perhaps most importantly, it is possible for the funded party to set aside the financial risk of pursuing a claim in return for sharing the returns.
In addition, some funders, particularly those that employ experienced litigators, are able to offer a well-informed view as to the merits of the case, effectively providing guidance as to which lawyers and consultants are best suited to manage the case.