Litigation funding or third party funding is basically the provision of capital to a plaintiff or law firm in exchange for a portion of the settlement amount from the lawsuit or arbitration. The key feature of litigation funding is that recourse is generally limited to the proceeds of the lawsuit award or settlement, which means that the funded party only needs to pay to the litigation funder if the party successfully wins or settles its case.
Litigation finance redistributes all or a portion of the financial risk of lawsuit to the funder. The capital provided by a funder can be used not only to pay for the attorneys’ fees and expenses associated with defending or prosecuting a legal action but also for any other business operations or to pay down or refinance debt. This finance, thus, frees up companies to allocate their capital resources to their best use, and actually help in projects which will optimize returns and promote economic growth. For individuals, it helps to give them the breathing space for certain period of time.
There are many reasons why companies prefer using third-party funding for litigation and they are:
• A lack of financial resources to optimally defend or prosecute any lawsuit. The litigation finance will allow the companies to afford the means to retain top legal talent.
• Helps in the off-balance sheet financing.
• Corporate opportunities make it more advantageous for the business to allocate their resources to projects other than paying for the meritorious legal claim. The finance is a tool that helps businesses efficiently allocate resources yet continue their regular lives.
• It helps to raise capital when the company’s underlying business has been damaged by the wrongdoing of another party and traditional capital sources who are often unwilling to invest at a proper valuation.
• To hedge risk
Elevant Finance Group LLC is a forward thinking finance firm. It has provided diverse and custom funding for consumer loans secured by home mortgages and automobiles and has always been empathetic towards the clients' needs. Visit elevant.finance or dial (855) 240-0246 to find out more about their services.
