Litigation can be incredibly expensive. Costs can quickly escalate in even the simplest of cases, and a lot of companies could find it difficult to fund the process without facing huge financial burden. That’s where third party funding comes in. In this situation, an external investor will provide interim cash flow to fund the case and ensure effective progression, thereby keeping budgets under control so the business can continue to function effectively.
The investor in question will expect a contingency fee or a share of the recovery proceeds should the case be won, thereby offering a good return on his investment. For many businesses this is far preferable to having to fund the entire case themselves, and often it’s seen as a small price to pay to keep the case progressing smoothly without any financial impact. However, there are always going to be risks involved and it’s just as much of a risk for the investor as it is for the company – if the case isn’t won they lose their investment and don’t receive any payment, so funding will normally only be an option if the case has a good chance of success.
Of course, the key to successful litigation funding is securing the right investor, and that’s why it’s often best to seek the expertise of an introducer. The Judge would be perfectly placed to help – they’ll be able to speak to a few potential funders before putting the case forwards to the one that seems the most viable, offering an invaluable service that can be key to effective progression of the case. Some funders will insist on ATE insurance being purchased before they’ll agree to fund a case so it’s important to be prepared, but with the right level of ATE insurance and litigation funding the business will be able to take the case forwards without additional financial concern.