How to Get Litigation Funding for Lawsuits

Litigation funding is a valuable tool that can provide access to justice for those who may not have the financial resources or do not wish to tie up their own funds.

It can be difficult to understand the process of getting litigation funding and how it works, but with some research and understanding, you can make an informed decision about whether it’s right for you.

This type of funding has become increasingly important for plaintiffs who might otherwise be forced to settle early due to financial pressures. By covering the costs of litigation, it allows individuals and businesses to pursue their cases fully without being held back by the burden of upfront expenses.

What Is Litigation Funding?

Litigation funding, also known as litigation finance or legal financing, is a form of capital provided by third-party investors to fund legal costs associated with a lawsuit. 

This type of financing allows claimants to pursue costly litigation without having to pay out-of-pocket expenses. The investor provides the funds in exchange for a portion of any settlement or award received from the lawsuit.

Who Can Benefit From Litigation Funding?

Litigation funding can benefit a wide range of people and organizations involved in lawsuits.

  • Individuals: Plaintiffs who cannot afford the costs of litigation or do not want to risk their personal finances can use funding to cover their legal expenses.
  • Businesses: Companies facing large legal bills can use funding to protect their cash flow while pursuing or defending their cases.
  • Law Firms: Litigation funding can help law firms:
    • Take on more contingency fee cases.
    • Manage operational costs without adding debt.
    • Compete with larger firms by pursuing complex, high-value litigation.
    • Invest in case development, including hiring expert witnesses and conducting research.

For law firms, litigation funding provides working capital to cover expenses, allowing them to grow their practice and take on challenging cases. It can help firms focus on delivering better outcomes for their clients without worrying about upfront costs or financial strain.

What Do Funders Look For In A Litigation Funding Application?

When applying for litigation funding, funders will typically look at several factors before deciding whether or not they will provide capital. These include:

  • The facts of the case: Funders want to know what the dispute is about and what the main legal issues are in order to assess its potential success.
  • The strength of the claim: Funders will review all relevant documents and evidence related to your case in order to determine if there is sufficient merit for them to invest in it.
  • The budget: Funders will want an accurate estimate of how much money is needed for your case so they can decide if they are willing and able to provide enough capital.
  • Your experience: Funders may also consider your experience with similar cases when assessing your application. They want assurance that you have sufficient knowledge and expertise when it comes to handling complex legal matters.

Where Can You Find Litigation Funding?

You can find litigation funding in many places, including commercial lenders, private investors, venture capitalists, law firms, and online platforms such as LexShares or Parabellum Capital. It’s important to do your research before choosing a litigation funder to ensure they have experience with cases like yours and understand your needs. Make sure you fully understand the terms and conditions of their investment before signing any agreements.

The diverse landscape of litigation funding provides plenty of options, but why should you consider litigation funding? It enables plaintiffs and law firms to access the resources needed to pursue cases without upfront financial strain. By comparing multiple funders and understanding their track records, you can find the best fit for your case.

What Documents Are Necessary for Applying for Legal Funding?

When applying for litigation funding, it’s important to have all the necessary documents prepared to support your case. Funders will typically require essential documentation such as medical records, incident reports, legal pleadings, and insurance information. Having these materials organized and ready can help speed up the approval process.

Additional supporting documents, such as evidence of damages, witness statements, and expert opinions, can strengthen your application by demonstrating the merit of your case. A complete documentation package shows funders the potential for a successful outcome and increases your chances of securing favorable funding terms.

Conclusion

Litigation funding can be an invaluable resource for those who need financial assistance during a lawsuit but don’t have access to traditional forms of capital such as bank loans or investments from family members or friends. With careful research and consideration of all factors involved in obtaining this type of financing, you can make an informed decision about whether it’s right for you and get the help you need during this difficult time.

FAQs

How much lawsuit funding can I realistically expect for my case?

The amount you can receive depends on factors like the strength of your case, potential damages, and the funding company’s evaluation criteria. Typically, funders offer a percentage of the expected settlement or award.

Can I get multiple litigation funding advances on one case?

Yes, in some cases, funders may approve additional advances if your case requires more resources. Based on case progress and potential recovery, this is subject to review and approval.

What percentage of applicants get approved for litigation funding?

Approval rates vary depending on the funder and the types of cases they accept. Generally, cases with strong merits, clear documentation, and high recovery potential have a better chance of approval.

What if my lawsuit litigation funding request gets refused?

If your application is declined, you can refine your case or documentation and apply to other funders. Seeking advice from legal professionals can also help improve your chances.

FAQs

Answers to some of our most commonly asked questions.

What types of lawsuits are eligible for litigation funding?

Litigation funding is available for most types of civil lawsuits, including commercial disputes, class action suits, and personal injury cases.

Does litigation funding require repayment?

Generally speaking, litigation funding does not require repayment unless there is a successful outcome in the case. If there is a successful outcome, then the funder will receive a portion of the proceeds from the lawsuit as payment for their services.

Is litigation funding expensive?

The cost of litigation funding varies depending on the specifics of each case and the terms agreed upon by both parties. In general, funders will charge an upfront fee and may also take a percentage of any proceeds from a successful outcome as payment for their services.

How long does it take to get approved for litigation funding?

The approval process for litigation funding can vary depending on the complexity of each case and how quickly all necessary documents are submitted by both parties involved in the dispute. Generally speaking, it can take anywhere from several days to several weeks to get approved for litigation funding.

Who provides litigation funding?

Litigation funding is typically provided by third-party companies known as “litigation funders” or “legal financiers” who specialize in providing capital to litigants or their attorneys in exchange for a share of any proceeds from a successful outcome in the case.