Law suits are time consuming, stressful and very costly. Regardless of whether it is a business fight, injury claim or an intellectual property litigation, the cost of legal services becomes a financial nightmare to the plaintiff. It is here that litigation finance (alternatively called litigation funding) comes to the rescue. It provides funds to litigants in return of a cut of the payout or judgment, enabling them to financially afford to seek justice without having to concern themselves with the costly legal fees. Nevertheless, not every case is eligible to litigation funding. Companies which provide funding investigate the validity, strength and value of a case before deciding to provide funds. We should examine the possible cases eligible to litigation funding.
Understanding Litigation Finance
Litigation finance is characterized by the third party party that funds a plaintiff or even a law firm to buck up lawsuits that are in the process of being tried. The funder gets their money back only in the case of win or settlement of the case therefore it is a non-recourse investment.
Due to this great risk, the funders can only fund few cases that they would like to be successful. The main considerations that they take are:
- Merits of the case (strong legal standing).
- Expected settlement or judgment amount.
- Ability of the defendant to pay the settlement.
- Jurisdiction and legal framework.
Types of Cases That Qualify for Litigation Finance
1. Commercial Disputes
Commercial litigation cases often involve large sums of money and complex legal issues, making them ideal for litigation finance.
Examples include:
- Breach of contract claims.
- Partnership or shareholder disputes.
- Business torts and unfair trade practices.
- Debt recovery cases involving significant amounts.
2. Personal Injury and Medical Malpractice Claims
Plaintiffs in personal injury or medical negligence cases may face financial difficulties due to medical expenses or inability to work. Litigation finance helps them sustain themselves while awaiting a fair settlement.
Examples include:
- Severe personal injury lawsuits.
- Medical malpractice claims.
- Product liability cases.
3. Employment Disputes
Cases involving wrongful termination, discrimination, harassment, or unpaid wages often qualify if they have strong evidence and a high potential for settlement.
Examples include:
- Wrongful dismissal claims.
- Workplace harassment and retaliation lawsuits.
4. Intellectual Property (IP) Litigation
IP cases often involve complex legal battles and high potential settlements, which makes them attractive to funders.
Examples include:
- Patent infringement.
- Trademark disputes.
- Copyright infringement.
5. Class Action Lawsuits
Class action suits involve multiple plaintiffs with common claims against a single defendant. These cases typically require substantial funding due to their scale and complexity.
Examples include:
- Consumer rights violations.
- Large-scale product liability cases.
- Environmental damage claims.
6. Arbitration and International Disputes
Arbitration cases, especially in international business disputes, often require litigation finance due to high costs and lengthy processes.
Factors That Determine Eligibility
Even if a case falls under the categories mentioned above, funders will assess certain criteria before approving funding:
- Strong Evidence: The case must have solid documentation and legal merit.
- High Potential Damages: Funders typically look for cases with significant financial outcomes.
- Experienced Legal Representation: A reputable law firm increases the chances of success.
- Defendant’s Ability to Pay: The opposing party must be financially capable of paying a settlement or judgment.
Cases That May Not Qualify
Not all cases are eligible for litigation finance. Funders often reject:
- Small claims with low potential recovery.
- Family law cases (like divorce or custody disputes).
- Criminal cases.
- Cases with weak evidence or legal uncertainties.
Why Litigation Finance Matters
Litigation finance evens the playing field, which means that individuals and companies have an opportunity to enforce their rights without struggling to find a sufficient amount of money. It guarantees that justice does not only apply to those able to pay it but anyone with a solid and sound case.
Conclusion
The litigation finance provides an opportunity to plaintiffs who have many legal expenses, and only the cases that have merit, evidence, and significant recompense are accepted. In case you recognize that you might want to arrange litigation funding, you need to discuss the situation with your lawyer and contact a well-known financing firm to evaluate the possibility of your case.