Litigation Funding: How does it work?

In an article published earlier this year, “We’ve been thinking about litigation funding – so you don’t have to”, Memery Crystal described a typical scenario involving litigation funding, in which a company could bring a claim without having to pay any legal costs and obtain insurance to cover the risk of having to pay any legal costs of the other party.

The availability of this kind of framework to de-risk the process of bringing a claim is of obvious benefit to almost any company, but particularly those who may be facing an adversary with the resources and determination to fight hard every step of the way.

An agreement to share a portion of any damages recovered with the funder in exchange for offloading the onerous obligation to fund the legal costs of pursuing the claim makes perfect sense.

In addition, when faced with a claim that is backed by a litigation funder, a strong strategic advantage of having a funder is that an opponent is likely to take the claim more seriously than it otherwise would.

Certainly, cynical tactics to try to run a claimant company out of money will not be available when that company has a funder standing behind them.

For more information download our free litigation funding guide here.