Using Litigation Funding to Create a Mutually Beneficial Relationship Between In-House and Outside Counsel
The benefits of litigation funding are often discussed in singular terms, such as how outside capital can benefit a corporate legal department or how it can act as a powerful tool for law firms. However, it is also important to consider how third-party funders can benefit multiple parties at once and create a more mutually beneficial relationship between client and law firm. An insights article by Ryan Schultz, vice president of business development at Woodsford, highlights a 2022 survey from the Association of Corporate Counsel that indicated legal departments have faced up to a 20% reduction in their budgets. Coupled with the lengthy timelines for litigation, Schultz argues for a more holistic approach which could allow litigation funders to bridge the gap between these two parties to support a strong litigation strategy. Schultz offers the example of a client with a limited budget bringing a matter to outside counsel, who feel pressured to either offer a painfully high discount on their services or refuse the matter. In such a situation, Schultz suggests that a funder’s provision of capital can both ensure that the in-house counsel are able to select their firm of choice, whilst allowing that outside counsel to still take on the matter without negatively impacting their own firm’s financials. Looking beyond the pure financial benefits, Schultz points out that by providing the capital required, a funder can preemptively dispel any tensions that may arise between in-house and outside counsel over the cost or discount of the legal services provided. For law firms, this has the added benefit of allowing their litigation teams to pursue clients that ordinarily wouldn’t be able to afford such high legal fees, thereby further buttressing the firm’s revenue streams.