Third party litigation funding is a form of legal finance, whereby the litigation funder agrees to support your claim financially in exchange for a share of damages recovered. Many successful companies and high net worth individuals are asset rich, but lack the cash flow to fund complex litigation. In such cases a private, commercial third party with no prior connection to the litigation may finance all or part of the claim in return for a portion of the proceeds. This approach is typically used for high value commercial cases, which have strong merits but may be too costly and drawn out for the litigant to bankroll. When finding a litigation funder, it is important to establish whether they have instant access to and direct control over existing funds or whether they are intermediaries who raise cash from other third parties on an ad hoc basis in order to finance litigation.
Pros
- Not Out of Pocket: as your claim is funded, you won’t have any money tied up in the litigation and there will be no impact on your cash flow
- Move Forward: third party litigation funding allows you to proceed with a case that might otherwise have stalled due to lack of finance
Cons
- Feasibility: only meritorious cases will qualify as the litigation funder’s earnings depend on the outcome of your claim, so there has to be a high chance of success
- Expensive: although your claim is funded, you will still have to pay out a share of any damages you recover so you will not get to keep all your compensation
As specialist litigation solicitors, we can connect you with various alternative funding sources if you instruct us to take your claim forwards. Please contact us to arrange a consultation.