Litigation finance, also known as lawsuit funding, has become increasingly beneficial to law firms recently. It provided them with sufficient funding to pursue legal claims in exchange for a portion of the case proceedings if the outcome is successful.
Law firm financing from third party has helped plenty of attorneys by giving them not only the financial finances to pursue cases but also the expertise and support necessary to achieve favorable outcomes.
With the assistance of a litigation finance company like Omni Bridgeway, law firms can take on more cases. They can also effectively minimize their financial risk and increase their revenue.
5 Reasons Why Law Firms Need Litigation Finance
An increasing number of law firms worldwide have been benefiting from litigation finance because of the ever-changing landscape of the legal industry. If you are a law company, here’s exactly why you must consider getting litigation finance:
1. Rising litigation costs
The litigation costs have significantly risen. Many legal cases require considerable investments in things like discovery and expert witnesses.
Litigation finance can help your company cover these litigation expenses. You can be able to pursue legal disputes that you might not be able to handle otherwise.
2. Increased competition
Several industries have become more competitive, and the legal department is one of them. Your law firm may be vying for the same cases and clients as other law companies. Law firm financing offers you the resources necessary to compete effectively.
Here’s how litigation funding can help you stand out from the competition:
Access to expertise
Litigation finance companies have a team of specialists in the finance and legal industry who can support and guide you throughout the litigation process. This could help you better understand the strengths and weaknesses of the legal cases you deal with. As a result, you can develop more effective litigation strategies.
Improved client relationships
Litigation funding will improve your relationship with your clients. By financing legal claims, you demonstrate your commitment to the cause of your clients. It also shows that you are very much willing to invest in the success of the case.
Increased case volume
Use litigation funding to cover the costs of a single case or a portfolio of legal claims. This flexibility will allow you to use commercial litigation finance to your advantage. Increase your law firm’s case volume without worrying about the financial burden.
3. Risk mitigation
Pursuing legal cases come with risks. And litigation finance can help mitigate such.
The litigation finance firm can deal with some or all of the financial risks related to the cases your law firm is handling. This allows you to pursue legal claims that you might have otherwise avoided because of the risks involved.
4. Reduced access to traditional financing
In the wake of a financial crisis, obtaining traditional financing like loans have become difficult, especially for law firms. Litigation financing offers an alternative source of enough financial resources to help your company grow and expand its practice.
An interest-bearing loan requires you to make repayments regardless of what happens to the case you are handling. If you lose the case, you are still obligated to repay the loan you took and the interest. This is not the case for litigation funding.
Litigation funding is non-recourse. That means the return on investment will only be collected when the case is successful.
5. High demand for favorable fee arrangements
People seek alternative fee arrangements that are more beneficial to them but still align with their goals. Litigation finance can help your law company to offer flexible fee arrangements to your clients. This could help you attract more new businesses.
Additionally, litigation finance will allow your lawyers and clients to withstand lowball settlement offers on your claims. This increases the chances that the legal dispute will be resolved based on its strengths instead of the financial strength of the parties involved.
Top Considerations When Getting Litigation Finance
Getting litigation finance can definitely help your law firm. But before partnering with litigation funding firms, carefully evaluate the funder and the agreement terms.
Here are the key things to consider:
Funder’s experience and reputation
Choose a reputable litigation funding firm with relative experience in the legal industry. Research the track record of the funder before entering into an agreement.
Scope of funding
You must consider whether the financing is for a single case or a portfolio or cases. Moreover, check who will have control over the litigation strategy. Is it your law firm or the litigation funders?
Terms of the financing agreement
Review the terms of the funding agreement meticulously. Check the amount of the fund provided and the percentage the litigation finance firms get in return. Also, look into all the fees associated with the financing.
Conflict of interest
Make sure that the litigation finance company does not have a conflict of interest with your client or the legal dispute. This includes conflict with the legal team or the defendants.
Ensure that the litigation funding provider has clear communication requirements. Also, check if they require access to the privileged information of the case. Most importantly, determine how that data will be protected.
Litigation finance is a valuable tool for law firms. It will help you grow your practice, reduce risk, and provide better service to your clients.
But you need to approach it with caution. Assess the terms of the funding agreement and ensure that everything it contains is compliant and fair. Partner with an expert in the litigation finance industry like Omni Bridgeway today!