Even Well-Heeled Clients Are Turning to Litigation Finance
We already know that litigation finance can provide opportunities to pursue bigger and more time consuming cases. We also know that funders help companies and clients who couldn't otherwise afford strong legal representation. But what about those who aren't strapped for capital? Why are they turning to litigation finance, when they don't appear to need to? Above the Law, in their series on litigation finance, explains that there are plenty of other reasons for lawyers or firms to team up with litigation funders. The most obvious being the mitigation of risk. Any company can be sued, meritoriously or not, and eventually, many large businesses find themselves in the position of having to sue. While this may not cause a financial crisis for the company, neither is it a cause to celebrate. A litigation funder can assume some risk by providing funding in exchange for a share of the recovery amount. This loosens up capital restrictions while allowing the company to pursue legal matters effectively. Litigation funders may also provide a sound measure of the merits of a case. When a big funder like Omni Bridgeway, for example, decides to fund a case—it's a strong indicator that a case has value and is worthy of being pursued. Further, many funders have vast experience and connections with researchers and others who can support the case. Litigation funding allows for the raising of capital, or the freeing of funds to be used for other purposes. Overall, this can reduce financial pressure and relax time constraints that might impact the pursuit of a claim. For plaintiff companies, funding enables them to exempt legal costs from their balance sheets, which provides increased solvency. During these uncertain economic times, it should come as no surprise that even prosperous clients are turning to litigation funding.