What Is Third-Party Litigation Funding?

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Third party litigation funding

Litigation funding is a way for plaintiffs to cover the cost of litigation and obtain working capital while they litigate a claim. A third-party company traditionally offers this type of financing. They take a financial interest in the claim but do not influence the litigation. Essentially the third-party firm is actually investing in the outcome of a legal claim and can lose its principal if the claim is not successful. This is also known as non-recourse funding.

Third-party litigation funding companies

In the past, legal financing companies saw litigation as a liability and not an asset. Until the outcome of a claim is realized, a funder viewed the claim as a liability because litigation is expensive, and there is a drag on future profits. 

Litigation funding companies turn that liability into an asset by helping corporations offset risk and gain access to capital for everyday business expenses (also known as operating capital).

In addition, litigation funding further reduces the burden to corporations by not only covering litigation-related expenses but giving them access to a portion of a future award. 

Additionally, law firms also offer corporate clients partial CFAs (contingency fee agreements), and litigation funding for law firms can help that company bridge the gap to cover costs that the law firm does not cover under a partial CFA. 

Non-recourse litigation financing allows law firms to litigate more cases since the financial burden is lessened and helps offset a corporate plaintiff’s risk when investing in their own litigation.

Request funding

You or your attorney can reach out to us via email or phone at 888-711-3599 to apply for commercial litigation funding. We will conduct an initial review of the claim to see if it fits our funding portfolio. From there, we will execute a short due diligence process that includes document collection and conversations with counsel. Once that due diligence period is over, we will present a term sheet that will allow us to execute a funding agreement and transfer of legal funds when signed.

If you’re ready to apply for a litigation loan with a reputable funder, check out Baker Street Funding’s litigation financing solutions.

At Baker Street Funding, we give you the inside scoop on pre-settlement funding by covering a variety of ... financing and legal topics to help you made the best financial decision for you and for your litigation. Our experts break down complex ideas in a way that's easy to understand so you can stay informed on current trends as well as tips and fact checked information by the CEO and founder, Daniel Digiaimo. Furthermore, Despite its name, consumer legal funding is not a loan. If you don't receive a recovery from your case, there won't be a repayment. To avoid confusion and simplify matters on, we'll use the word "loan" throughout this article.

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