Litigation finance is also known as litigation funding or legal financing. It is a financial arrangement wherein a provider like Omni Bridgeway offers funding to individuals or businesses involved in a legal dispute. The funding will cover litigation costs.
The main perk of litigation funding is to allow individuals and businesses to pursue their legal claims without the risk and financial burden associated with the case proceedings.
There are two types of litigation finance:
- Consumer – non-recourse cash advances for individual consumer cases like personal injury plaintiffs.
- Commercial – non-recourse litigation finance investments in any type of large commercial dispute that an individual or company brings in exchange for a piece of the ultimate recovery.
This post will tackle commercial litigation finance, its types, and its benefits. It also includes tips for choosing an excellent litigation finance company.
3 Types Of Commercial Litigation Finance
Here are the available commercial litigation financing options:
1. Single-Case Financing
As its name implies, single-case litigation finance offers funding to support a single arbitration or case. It may also include:
- debt satisfaction
- working capital
- other items subject to recovery from the dispute
In some cases, single-case litigation funding also includes financing for a defendant. It’s when the claimant and the funder agree on a non-recourse return structure.
2. Portfolio Financing
Portfolio litigation funding supports multiple arbitrations or cases of a law firm.
- Law firm portfolio – The investment of the funder will be collected or come from the legal finance that the firm gets from the portfolio cases.
- Corporate portfolio – The funder is paid from the eventual recoveries in disputes. It can also be based on arrangements that both parties agree on in advance.
Additionally, portfolio financing can be used to fund defense-side cases. And the recoveries will come from the disputes of the plaintiff.
3. Multi-Party Financing
Also known as lawsuit financing for group claims, multi-party litigation funding provides finance for an action against the defendant in lieu of a group. Several claims are suitable for funding. These include environmental and product liability actions and shareholder/securities.
Get a good grasp of the different financing types available to you. Make an informed decision regarding how to finance the litigation process. And ultimately, achieve a favorable outcome.
Common Uses Of Commercial Litigation Funding
- Getting working capital
- Monetizing litigation assets and legal claims for business purposes
- Eliminating commercial litigation costs from corporate balance sheets
- Preserving the resources and valuation of leading law firms
- Paying commercial litigation expenses, including attorneys fees
Top 5 Benefits Of Commercial Litigation Finance
Here are the perks of getting litigation finance:
1. Improved Cash Flow
Commercial litigation funding will help improve your cash flow. It gives you access to financial resources that might otherwise be tied up in litigation costs. This is especially useful for businesses or individuals with limited funding.
2. Reduced Financial Risk
Legal disputes can be very expensive. The uncertain legal proceedings may even result in expenses quickly adding up.
Commercial litigation funding will help minimize the financial risk associated with your case. It offers you financial resources to cover the cost of the case proceedings. In return, you must give the litigation funders a percentage of the proceeds if you win your case.
3. Access To Justice
Most companies and individuals do not pursue legal claims due to a lack of money. Litigation finance will help increase your access to justice by providing enough funds to file and win your case.
4. Expertise And Support
Litigation finance companies will have extensive experience and expertise in the legal system.
Omni Bridgeway, for instance, has over 30 years of experience and a team of specialists in intelligence, law, and finance. They will offer proper guidance and valuable support throughout your commercial disputes. This can help you with case strategy, process management, and legal counsel selection.
5. Faster Resolutions
Commercial litigation funding will help speed up the lawsuit process. It will minimize the financial pressure on you to settle quickly. It also ensures that your case is resolved efficiently and on time.
Tips For Choosing Litigation Finance Companies
Here are tips and tricks to remember when searching for the best provider of commercial litigation finance:
- Thoroughly research those companies financing commercial litigation. Check their experience, track record of success, and reputation. Find also if there are any legal issues or complaints filed against them.
- Litigation finance providers specialize in different types of industries or cases. Consider the experience of the litigation finance firm in your area of litigation. Check also if their focus aligns with your needs.
- Review the terms of the business litigation financing agreement offered to you.
- Obtain offers from multiple providers and compare their offerings and terms. Doing so is the only way you can choose which provider offers the best funding for your financial situation.
Commercial litigation is a valuable tool for individuals and businesses to pursue legal claims. It reduces the financial burden and risk of litigation. Make sure, though, to find the finance provider who can help you achieve a successful outcome.
Frequently Asked Questions (FAQs)
Here are some of the frequently asked questions related to commercial litigation finance:
Commercial litigation finance, also known as litigation funding or third-party litigation funding, is a practice where a third party provides capital to a business involved in a legal dispute in exchange for a share of the potential settlement or judgment.
Litigation finance helps businesses manage the high costs of legal proceedings. It allows them to pursue meritorious claims without the financial burden, thereby leveling the playing field against well-funded opponents.
Commercial litigation finance is offered by specialized funding firms or investors who are willing to take on the risk of funding a lawsuit in exchange for a portion of the final award if successful.
No, litigation finance can benefit both plaintiffs and defendants. Plaintiffs may use it to cover legal expenses, while defendants may use it to manage their legal costs and mitigate risks.
Repayment varies based on the terms of the funding agreement. Typically, the funder is repaid from the settlement or judgment amount. If the case is unsuccessful, the funder usually doesn’t receive repayment.
The use of litigation finance generally does not affect the legal merits of a case. The decision to proceed with or settle a case remains in the hands of the litigants and their attorneys.
Litigation finance is considered a risk investment, and therefore, the fees charged by funders can be relatively high. However, it’s important to weigh these costs against the potential benefits of securing necessary capital for the case.
Ethical standards in litigation finance can vary by jurisdiction. It’s essential for businesses and their legal counsel to be aware of and comply with any applicable ethical rules and regulations.
While litigation finance is versatile, funders typically focus on cases with a high likelihood of success and substantial potential damages. Each funder may have specific criteria for the cases they fund.
– Finding a reputable litigation finance provider involves research and due diligence. Seek referrals, read reviews, and interview potential funders to ensure they align with your needs and objectives.
Conclusion: Unlocking Financial Options for Legal Battles
Commercial litigation finance can be a valuable tool for businesses facing legal disputes, offering financial support and risk mitigation. As with any financial arrangement, it’s essential to fully understand the terms, assess the potential benefits, and seek professional advice when considering litigation finance for your case.