Litigation funding is the funding of legal cases by third parties for a pre-agreed share of the proceeds (costs + damages) if the case is successful - either through settlement or winning at trial.
Litigation funding is a mechanism that allows plaintiffs who cannot afford to pursue legal action to do so by partnering with third-party funders. The funding covers the costs of litigation, including legal fees, expert witness fees, court fees, and other expenses, in exchange for a percentage of the proceeds if the case is successful. This type of funding is typically used in complex and expensive legal cases, such as commercial disputes, personal injury claims, and intellectual property disputes.
Litigation funding provides a valuable service to plaintiffs who may not have the financial resources to pursue legal action on their own. It enables them to level the playing field against well-funded defendants, who may have significant financial resources to draw on. The funding also helps to reduce the financial risk associated with litigation, as the third-party funder takes on the financial burden of the case.
However, litigation funding has also generated controversy in some jurisdictions, particularly around the issue of champerty and maintenance, which refers to the historical prohibition against third parties funding lawsuits in exchange for a share of the proceeds. Today, many jurisdictions have lifted these prohibitions and allowed litigation funding, subject to regulation and oversight.
Litigation funding is the funding of legal cases by third parties for a pre-agreed share of the proceeds (costs + damages) if the case is successful - either through settlement or winning at trial.
