Insights

At its most basic level, litigation finance is the practice whereby a third-party, previously unrelated to the antecedent event of a lawsuit provides money to one of its parties in return for a financial reward derived from a potential positive outcome. The capital provided by Litfin investors may help individual plaintiffs pay for living expenses or directly pay for some of the costs of litigation, including attorneys’ fees, expert witness fees, court costs and other expenses associated with a lawsuit. Alternatively, it can be invested in law firms to finance operations that support a broad portfolio of lawsuits. The financial reward for investors can take different forms including a flat fee, a multiple on the amount advanced, a percentage of the amount recovered or an interest rate when it is a loan to a law firm (among other more creative structures).