Litigation finance explained
In its simplest form, litigation finance occurs when a litigation funder agrees to pay the costs of pursuing a legal claim in return for a share of any recovery obtained through settlement or adjudication.
A funder may also agree to pay other costs associated with the claim, including putting up security for costs or taking out “After-The-Event” (ATE) insurance to cover an opponent’s legal costs if the case loses.
Under most litigation finance arrangements, funds are advanced by litigation funding firms on a non-recourse basis. If there is no recovery of proceeds through settlement or adjudication, the claimant owes the funder nothing.
Litigation funding (or “litigation finance”) restores balance to commercial disputes, allowing litigants to obtain results that properly reflect the merits of the case rather than being forced to compromise on sub-optimal terms by a better-resourced opponent.
Litigation funding in the UK promotes access to justice and is supported by the UK judiciary. Litigation funding in Australia, the USA and other common and civil law jurisdictions is also a well-established tool.