Third-party litigation funding is also called legal funding or litigation finance, and it’s a specialist form of finance used to support litigation claims. In this short article, we’ll cover the key points.
What is litigation funding?
Litigation funding exists to finance litigation cases where claimants have a good chance of winning, but lack the funds to pursue justice. A London law firm such as //www.forsters.co.uk may represent the claimant, and a specialised funding company will offer capital to meet costs. In return, they will receive a share of the outcome if it is successful.
Essentially, litigation funding is a form of investment capital specifically designed for lawsuits. It takes some of the risk away from the claimant or law firm and allows the founder to step in – for a fee- to cover the expenses of litigation, such as legal fees and court costs.
How does it work?
A London law firm or claimant will approach the litigation funder and provide details of the dispute. The funder will evaluate the case to assess how likely the chances are of success. This usually takes between 2 and 8 weeks, depending on the nature of the case and its complexity. If the funder is prepared to finance the case, the parties will sign a formal agreement, and then the lender will offer the finance to progress the litigation.
If the case is successful, the lender will then recover their costs and take a proportion of the awarded sum. This is why lenders will only finance cases that they believe will win.
