6 Types of Litigation Funding
Litigation funding is a practice where a firm finances a legal dispute to get a portion of the case’s proceeds. This has become a tool for litigants to seek help when running out of financial resources. According to research, the litigation funding investment market is expected to grow to $22,720.32 million in 2028, which makes the industry a growing one.
Get to know the various types of litigation funding.
1. Single-Case Funding
The most common among the litigation funding types, this one-off deal takes place when the funder provides financial support for a legal claim. The litigation funders get a significant share of the proceeds that were agreed upon should the case be successful. Funders can’t reclaim the invested funds if the case is lost with no proceeds recovered.
This structure works well in the litigant’s favor. It’s non-recourse, meaning they won’t pay anything regardless of how the case turns out. They can pursue their claims and pay litigation costs.
2. Portfolio Funding
In portfolio funding, the litigation firm provides money for a portfolio of cases instead of a single one, hence its name. This spreads the financial risk for the litigants and the funder. Losses in one case get offset by wins in others. The capital invested will return as settlements of judgments in the cases within the portfolio.
All the parties involved reap the benefits of portfolio funding. The law firm has a lesser financial burden of handling multiple cases all at the same time. They can allocate their resources efficiently within their business. The funder sees this arrangement as less riskier than funding a single case. Portfolio funding is one of the diverse services that litigation funding firms can provide.
3. Post-Settlement Funding
Sometimes, the settlement may take too long to arrive. You might need the money to pay for expenses, living costs, litigation costs, attorney fees, and more.
This is where you can use post-settlement funding. It’s a kind of funding that helps plaintiffs get by while waiting for the settlement. Claim your cash advance within 24 hours after submitting your application. The rest of the funds are fully disbursed after approval.
Post-settlement funding benefits attorneys since they can use the money as capital to operate their law firms. This can improve the cash flow and act as a bridge between case settlements and getting the fees.
You’re qualified to apply for post-settlement funding when you’re involved in the following cases:
- Accidents like car, pedestrian, and motorcycle
- Product liability
- Medical malpractice
Submit documentation to back your application, such as a letter from the attorney with the amount you settled for and the funding you requested from the lending company.
4. Commercial Litigation Finance
Businesses can feud with other companies due to fraud, tax disputes, employee issues, intellectual property issues, and more. It’s totally unavoidable, and if you’re a person or a business wronged by a powerful entity, commercial litigation financing is your best bet.
In commercial litigation finance, the firm will fund the litigation of a small business against their opponent. The business itself will maintain its financial stability once it gets funding from the firm. Just like single-case funding, money for commercial litigation is non-recourse. The funder will get a portion of the agreed share if the case wins and none if you lose.
5. Appeal Funding
Sometimes, you need to challenge an error in a judgment while you’re in a lawsuit. Appeal funding can help pursue your appeal minus the financial burden and get a higher chance of a successful result. This is useful for litigants without monetary means to pursue an appeal.
The risk is more significant in appeal funding and often comes with higher costs. Talk to your legal adviser if you want to pursue an appeal with zero funding.
6. Defense Funding
Your lawsuit might involve someone from a higher social rank who can definitely twist the legal system to their favor. This is where you need defense funding. It’s a kind of litigation funding that can help you cover the legal costs of a lawsuit against a well-funded enemy in court. It helps protect your capital, cover litigation expenses and expert witness costs, and encourage early legal settlements.
Pave Your Way to a Winning Case by Working with a Litigation Finance Firm
Lawsuits are tiring in many aspects, including financial ones. You find yourself scrambling for your defense while your resources are waning. A litigation finance firm will help you fight your opponents with sufficient funding.
You don’t need to stress out with litigation finance firms when paying the money back. You just have to work hard to win the case. This money can help you with your personal expenses as you battle it out on the court.
Final Thoughts
These kinds of litigation funding are available depending on your situation. Whatever funding you choose can alleviate your worries about finances as the lawsuit drags on. You can use the capital without shouldering the burden of paying it back. As litigation funding grows, more convenient methods will likely emerge to help you with your case.