How do Litigation Funding Companies Choose Cases?

Litigation funding has increased in popularity in recent years. Many big businesses that have chosen to take another company to court have turned to this option, as it can assist them in getting the funding that is required to sustain the case.

What is litigation funding?

It is a funding method which is also often referred to as third party funding. It can provide companies with funding for cases. Most litigation funding companies only accept cases when presented through a solicitor, which can be easy to arrange.

When businesses choose to take a claim to court but they don't have the necessary funds to do so, a litigation funding company could prove to be a viable option. The business would not need to pay anything in the first instance and would only seek to recoup the loan should the case win.

How much do litigation funding companies recoup?

This all depends on the third party funding company in question. Some ask for their initial investment back plus a Return on Investment (ROI) of around 30% of the damages that have been awarded. Others ask for the investment plus an amount equal to three times this amount as their ROI.

What kind of cases do third party funders take on?

In order to take on a case, third party funders must go through extensive due diligence procedures first.

If a case is accepted, it must:

• Be of high value (some third party funding companies will only accept cases with a value of more than £5m)
• Be strong enough to win
• The defendant has to be able to pay for the case

Also, commercial law is the main sector for litigation funding at the moment, as this can provide funders with the best ROI. There is of course increased risk with funding cases which are of higher value, but the potential returns can be worth this.

At the moment, smaller cases of lesser financial merit are not taken on as there is no real market for them. However, there is some speculation over whether the recent introduction of Alternative Business Structures (ABS) could change this.

What is the future of third party funding?

Litigation funding has steadily increased in popularity over the years and has also seen success in the USA and Australia. Australia has a quite similar system to the UK’s, whereas the USA has some differences.

It is thought that, as law firms begin to familiarise themselves with the third party funding market, it will become more commonplace and an increased number of big businesses will choose to use it.

This article was provided by Aurora Johnson on behalf of Vannin Capital, a litigation funding company working within the commercial sector. You can visit ligitationfunding.com to find out more.

How a Commercial Lawsuit Loan Can Keep Your Business Afloat

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Nowadays the costs of court litigation are really high which means that a commercial lawsuit will definitely make a great difference to your company. Before understanding how this can help you to keep your business afloat you need to know what a commercial lawsuit is all about.

What is commercial lawsuit?

Commercial lawsuit is basically any kind of legal controversies which are associated to business concerns. It covers all kinds of conflicts in business and comprises of various heads which includes cases like Employment disputes, disbanding of business, issues related to franchisees, shareholders, and partnerships, payment disputes, collection of debts etc. That is not all. There are various issues related to commercial lawsuits.

Description of a commercial lawsuit loan

It is also important to know the working of commercial lawsuit finance to measure the true value of the loans. There are various types of financial institutions who offer commercial loans for lawsuits. They offer the money with the belief that the client will win the battle they are fighting. If you are the one who is strangled in the battle you can always approach a lawsuit firm who will help you out considering the merit of your case. 

Depending on that they will pay you good amount of money in advance. The money needs to be paid back if you have won the case. Sometimes if they feel you are on the weaker side, they charge a fee along with the advance money.

Why you should not always hope of winning the game

It is not always necessary they you win every case. Your case might be strong but at the same time it needs to give good amount of time to win. Judicial cases take a long time to fight a legal battle and then win because of the lengthy court procedures. There are numerous businesses that have a chance of winning; however they are bankrupt by the time they are on the verge of a judgment. The ongoing costs of litigation are really expensive if it is a long drawn battle and most of the people cannot go by the same.

Good enough for you to suffice

The law firm understands the merit of your case and depending on the same they pay you an advance. This will definitely help you to fight your case.

Protecting a multiplicity of requirements

Since you are dealing with businesses, your firm can get occupied in numerous legal disputes. However the commercial law firms give you advance money for certain selective disputes such as disputes in real estates, copyright violation claims, infringement and any others.

You can use it for your own purpose

The advance money which the lawsuit firm offers to your company can be used by your company for their own lawful business requirements during the pendency of the case. This is what helps your company to keep afloat during the pendency of the case.

As per the researchers from Logbook Loans, the money can be used by you to increase your business as well as pay off the employees of the companies. So though you are under a legal litigation, you are not being stopped from expanding your business. You have all the scope to grow as a good business firm. This is how a commercial lawsuit loan can always help you to keep your business afloat and help you to expand your business.