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Reported use of legal finance—also called litigation finance or litigation funding—has doubled in recent years, as companies and law firms increasingly recognize the benefits of gaining better control over legal budgets and risk without ceding control of litigation decision-making or settlement1.
Nonetheless, many potential users of legal finance want to know more about legal finance solutions, how they work and the factors they should consider.
Defining legal finance
Legal finance is commonly used to remove the costs associated with commercial litigation or arbitration (lawyers’ fees, case expenses, etc.), or to accelerate the value of pending claims, judgments, awards or fees (often called monetization), with a third-party funder assuming downside risk of loss in exchange for a portion of the ultimate recovery.
Financing typically takes one of several forms:
- Fees & expenses finance: Funds the costs and expenses of a single litigation or arbitration
Learn more → - Monetization: Acceleration of the value of a pending commercial claim or an uncollected judgment or award
Learn more → - Portfolio finance: Capital facility to fund multiple litigation or arbitration matters in a single funding vehicle that may include a mix of defense- and plaintiff-side matters
Learn more →
1 Except in limited circumstances unrelated to law firm financing, and only when agreed to in advance by the underlying client.
