The litigation funding landscape has shifted as economic pressures push funders to become more selective. While capital is still available, funders prioritize strong cases and well-established law firm partnerships. As a result, law firms must adapt their approach to secure funding by demonstrating financial stability, presenting high-quality case portfolios, and strengthening their documentation.
Success in today’s market requires firms to adjust their funding strategies to meet stricter underwriting standards. Factors such as enhanced documentation requirements, stronger case merit demonstrations, and clear revenue potential are critical in approval decisions. Understanding these evolving dynamics can help law firms optimize their applications, making them more appealing to funders while increasing their chances of securing litigation financing.
Tips for Getting Litigation Funding in a Tightening Market
As funders raise their standards, law firms must refine their funding applications to increase approval odds. Strengthening case documentation, providing well-supported financial projections, and showcasing firm stability are now essential to securing funding.
To stand out, firms should highlight their competitive advantages, such as a strong settlement track record, a well-structured case portfolio, and a history of successful litigation. Building relationships with multiple funders and proactively presenting firm strengths can also create leverage when negotiating funding terms. By adapting to the tightening market, law firms can still access the financing they need to take on complex cases and expand their practice.
Below are key factors that funders consider when evaluating litigation funding applications:
Merits, Damages, Collectability
You need to be able to address all three of these points with funders. Make sure you have your supporting documentation in advance of speaking with a funder. At the very least you need the complaint and all the pleadings of dispositive motions, both sides’ papers. If you have an expert report on damages, that is ideal, but it is not necessary. What is necessary, is your own theory and calculations on damages. You need something more than, “I think this case is worth $20m.” Lastly, be prepared to answer questions about the financial health of the defendant and their ability to pay.
Legal Budget
You need to have a legal budget that will show a funder how you are going to wisely use their capital. The more detailed the better. The best budgets break down the spend based on the stage of the case. For example, it is going to cost $x to get past the motion to dismiss, the discovery phase will cost $x, and trial will be $x.
Hone Our Pitch
Make sure that you are well prepared when you get your chance to pitch your case to funders. You only get one chance to make a first impression. Know your facts and legal arguments cold. It is also good to acknowledge the weak points of the case and address them directly.
Confirm Capital
Make sure the litigation finance company you are speaking with has cash on hand to deploy. While this may seem silly, many funders are currently low on funds and may have to raise capital to provide you with funding. Confirm that they have cash on their balance sheet ready to go.
How Can Law Firms Secure Litigation Funding?
To secure litigation funding, law firms must present a well-prepared application demonstrating strong case evaluation skills, sound financial management, and a proven ability to generate returns. Funders assess law firms beyond individual case merit, looking at how efficiently they manage litigation, their history of successful settlements, and their overall financial stability. A diverse portfolio with a mix of high-value and lower-risk cases can make a firm more appealing to funders by showcasing consistent revenue potential.
Building strong relationships with funders is also key. Firms that maintain open communication, provide clear case progress updates, and demonstrate transparency in financial planning are more likely to secure funding on favorable terms. Establishing credibility through detailed case documentation and a solid risk management approach ensures funders view the firm as a reliable investment partner, increasing the likelihood of both single-case and portfolio funding approval.
What Impacts Litigation Funding Approval in Today’s Market?
In today’s market, litigation funders are more focused on risk assessment than ever before. Law firm financial stability, portfolio diversification, and expertise in specific practice areas have become key factors in approval decisions. Funders now prioritize firms with a strong history of case management, clear litigation budgets, and realistic settlement timelines. Firms that can demonstrate efficient operations and a history of securing favorable outcomes are more likely to receive funding.
Beyond case merit, funders assess operational efficiency and financial sustainability. They analyze metrics such as partner track records, case resolution speed, and projected recoveries to determine whether a firm is a reliable investment. A well-managed portfolio of litigation financing assets can improve approval chances, as funders prioritize firms with diverse, high-value cases that show clear revenue potential.
Conclusion
Securing litigation funding in today’s market requires thorough preparation and a strong understanding of the essence of litigation funding. Law firms that prepare strong applications with well-documented cases, clear financial projections, and a history of successful litigation are more likely to obtain funding. By adapting to stricter requirements and demonstrating operational stability, firms can still access the capital needed to pursue complex cases and drive growth.
Building long-term relationships with multiple funders is also key. Consistently maintaining transparent communication and proving a track record of responsible fund management can improve approval odds now and in the future. As market conditions evolve, firms that establish credibility and align with reliable funding sources will have a stronger financial foundation for continued success.
FAQs
How can law firms improve their funding applications?
Strengthening case documentation, presenting detailed financial projections, and demonstrating a strong track record of successful settlements can improve approval chances.
What firm metrics matter most to litigation funders?
When evaluating law firms, funders assess financial stability, case resolution timelines, settlement success rates, and overall portfolio diversification.
Can small law firms get litigation funding?
Yes, small firms can qualify if they present strong case merit, clear recovery potential, and sound financial planning to demonstrate their ability to manage litigation funding effectively.
How can I improve the chances of getting approved for litigation funding?
To strengthen their application, firms should showcase case strength, maintain transparent communication with funders, and highlight past litigation successes.
How can firms speed up litigation funding approval?
Submitting a complete application with all required documentation, maintaining an open dialogue with funders, and responding quickly to requests can help accelerate the approval process.
