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The Secrets of Litigation Finance

December 9, 2022

Litigation finance refers to a financing arrangement between a lender and litigant who has an outstanding claim or judgment against the opposing party in order to provide them with immediate capital.

While litigation can be lengthy and expensive, litigation finance provides litigants with the financial resources they need to pursue their claims without having to stop for lack of funds. It is typically arranged through private lending companies that have experience in providing debt financing solutions for commercial and personal cases alike. Here are the secrets of litigation finance.

The Lender is not Responsible for the Decision to Sue

Litigation finance is fundamentally different from ordinary financing because the lender is not providing capital based on a borrower’s judgment or decision to sue. While the litigation process might make it seem as if there are two sides, the defendant and plaintiff, the only side that matters in litigation finance loans is that of the plaintiff. It does not matter whether or not there is a valid claim; what matters is whether or not the plaintiff has enough money to pursue his case.

The Lender is Not Responsible for the Case

In litigation in Grand Rapids, the lender’s only responsibility is to provide capital to the plaintiff. The borrower is responsible for making sure that their case stands up in court, and for paying off any final judgments or settlements. Unlike other types of financing that involve multiple parties,

litigation finance does not include a large number of parties and therefore has a less complicated flow of funds.

Litigation Financing is Available to All

Not all types of litigation financing are available to everyone. The type of lending that has the most options is called secured litigation financing. This type of lending involves securing a lien against a claim in order to receive the money necessary to pursue it. In general, other types of financing, such as unsecured litigation finance, require that all defendants in the case settle with the plaintiff before filing a lawsuit and will therefore be less flexible.

Financing Options are Unlimited

While most financing options have some sort of limit, litigation financing is available to everyone. With other types of financing, the death of a defendant may prevent the plaintiff from obtaining further funds after a judgment has been rendered. The lender in this situation is not willing to come up with more money because they are unable to guarantee their return. Litigation finance, on the other hand, does not require any guarantees so long as there are sufficient funds for the case and any eventual judgments or settlements.