Litigation financing, also known by the names ‘Third Party funding’ or ‘Litigation Finance’ is a type of funding where a third party funder provides funding to a claimant in a case, in exchange for financial returns in the event of a successful case. These can be in the form of an agreed return or a share in the proceeds. For Litigation Funding, contact novo-modo.co.uk/litigation-funding
For centuries, wealthy individuals and organisations have provided funds for litigation support in exchange for a portion of any potential winnings. The industry has grown and expanded significantly in recent decades. This is reflected in the growing number of funders, and the funding solutions that are now available.
Litigation financing can be an invaluable tool for claimants and plaintiffs who cannot afford to pay the costs of litigation on their own. Legal representation, court costs, and other expenses add up fast. Even if a claimant has a good case, they may not be able pursue it because of insufficient finances. In addition, well-capitalised companies are increasingly using litigation funding to optimise their financial resources. Litigation financing can help claimants ‘level out the playing field’, by providing them with the financial resources they need to pursue their case.
Litigation financing is also used for collective action, where the costs of each plaintiff outweighs the benefits. By using litigation funding to bundle claims, claimants can benefit from cost sharing while also shifting costs and risks onto a third party funder. This makes such claims (and therefore access to justice) financially viable.