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Agile Payments Blog

Litigation finance is an industry that provides funding to businesses with legal disputes. The cost of pursuing a legal case could be a significant barrier for many companies. With commercial litigation finance, businesses now pursue litigation without the financial burden. Read on to learn how. INDEX What is Commercial Litigation Finance? The Role of Litigation Funding Firm Considerations When Implementing Legal Finance Common Misconceptions About Commercial Litigation Funding How to Choose Your Commercial Litigation Funding Provider The Bottom Line

What is Commercial Litigation Finance?

Commercial litigation finance is also known as third-party litigation funding. It is the practice of a third party unrelated to the lawsuit providing financial support to the litigant. The expense of commercial litigation includes:
  • Attorney fees
  • Depositions
  • Questioning
  • Background checks
  • Conferences
  • Motions
  • Witness preparation
  • Expenditures for the consultants, court, and investigations
When a business has financial backing, they are serious about seeking justice. This can encourage the other side to engage in settlement discussions.

The Role of Litigation Funding Firm

Beyond providing funds, skilled litigation funders bring value. The right law firm provides the following:
  • Promoting methods for pursuing action lawsuits
  • Assisting businesses in managing the litigation costs and charges associated
  • Assessing and approving a company’s legal claims
  • Assisting businesses in choosing the best legal attorneys for the job
  • Acting as seasoned outside consultants for businesses
Every lawsuit financing company has a different underwriting procedure for possible strategy. The skilled litigation team evaluates the legal claims in the initial underwriting stage. It’s to see if they satisfy the firm.

Considerations When Implementing Legal Finance

Implementing commercial legal finance strategies requires careful consideration and planning. Businesses must know their needs and objectives. Some considerations to keep in mind are:

Case Evaluation

Conduct a thorough evaluation of the merits of the case. This is to determine if it is suitable for litigation finance. Consider factors such as:
  • likelihood of success
  • potential damages or recovery
  • estimated duration of the case

Financial Analysis

Assess the financial implications of pursuing the case. This includes the expected legal fees, expert costs, and other expenses. Compare these costs to the potential funding available through litigation finance. This is to determine the financial viability of the strategy.

Risk Assessment

Evaluate the risks associated with litigation. You think of potential adverse judgments, counterclaims, or negative publicity. On a side note, consider how litigation finance can help mitigate these risks. This also enhances the chances of a successful outcome.

Legal Team Collaboration

Work closely with your legal team to develop a comprehensive litigation strategy. Ensure that your team is aware of your intention to use litigation finance. You also need to involve them in the selection process of litigation funding firms.

Common Misconceptions About Commercial Litigation Funding

It’s best to address these misconceptions and provide clarity on the realities. Here are some common misconceptions:

Misconception 1

Commercial litigation finance is only for struggling businesses. In reality, litigation finance is suitable for businesses of all sizes. Litigation finance provides a strategic advantage to businesses by mitigating risk. They also allow them to allocate resources to other areas of their operations.

Misconception 2

Litigation finance providers control the litigation strategy. Meanwhile, litigation finance providers may offer guidance and expertise. Litigation finance providers are partners, not decision-makers. Know that their goal is to support the business in achieving a successful outcome.

Misconception 3

Commercial litigation finance is only available for certain types of cases. In reality, litigation finance is available for a wide range of legal disputes. Each case is assessed on its merits. As such, these funding decisions are made based on the potential for success and recovery.

How to Choose Your Commercial Litigation Funding Provider

Selecting the right litigation finance provider is best to ensure a successful partnership. Some key factors to consider are:
  • Reputation and track record. Look for providers with a proven history of supporting similar legal disputes.
  • Expertise and industry knowledge. Assess the provider’s expertise in the specific area of law relevant to your case. A litigation finance provider with specialized knowledge can offer valuable insights and guidance.
  • Financial stability. Check the financial stability to ensure they can support your case from start to finish. A financially stable provider can provide ongoing funding and support.
  • Flexibility and transparency. Seek a funding provider that offers flexible arrangements tailored to your needs. Transparency in the funding agreement is also crucial. It also ensures that there are no hidden fees or unexpected obligations.
  • Collaborative approach. Look for litigation finance firms that value collaboration and open communication. A provider who actively engages with your legal team will enhance the chances.

The Bottom Line

Due to financial constraints, businesses feel limited in pursuing reasonable legal claims. Businesses of all sizes may pursue legitimate legal claims with law firms. Although the market for commercial lawsuit financing is still new, demand is rising. Commercial litigation funding increases access to justice for businesses and their legal departments. This is while removing the risk and expense often associated with litigation.