The U.S. legal system promises justice for all and provides the opportunity for everyone, no matter their socio-economic status, to file a lawsuit or legal claim. However, despite the fact that the legal system provides such rights, it does not make the pursuit of such rights easy. Litigation is expensive, for most people prohibitively so. In recent years, litigation financing has emerged as a means of funding cases with a strong likelihood of success—even if a plaintiff does not have the capital on hand to fund his or her case. In addition to being beneficial for plaintiffs, the concept is also beneficial for the law firms with which they work.
Law firms that utilize litigation financing often experience stronger client relationships, reduced risk, and increased profits. In short, law firms that take advantage of this relatively new concept experience more growth.
What is Litigation Financing?
Litigation financing entails a third-party lender providing nonrecourse capital to plaintiffs and law firms to fund their legal expenses and corporate operations. In exchange, the financing company gets in interest in a client’s settlement. If a claim proves to be unsuccessful, the lender gets nothing.
While LF has been met with its fair share of opposition, many legal bodies have begun to view the concept favorably, with many applauding its ability to allow “lawsuits to be decided on their merits, and not on which party has deeper pockets or stronger appetite for protracted litigation.” In the UK, it is not a requirement that counsel make clients aware of pre-settlement funding because of its ability to level the playing field.
How can You Use Litigation Financing as a Business Development Tool?
There are says ways in which you can use legal funding as a business development tool, including but not limited to reducing risk factors and obtaining impartial opinions regarding cases’ merit. However, the most significant way in which litigation funding helps law firms is that it provides them with an innovative way to attract larger cases by offering clients more strategic solutions for pursuing claims for they otherwise could not afford. It is not uncommon for smaller firms to turn down big cases because of the risk involved in spending significant reserve or future capital on costly resources. When those firms turn to litigation financing, however, they can meet the extensive and often costly demands of larger cases and utilize the best resources available
The ability to provide clients with such resources demonstrates a firm’s commitment to client relationships and sensitivity to complex legal matters. This fact in and of itself can help the firm attract bigger, better, and more prestigious cases.
If you have yet to use litigation financing in your firm, you may be unwittingly denying your firm ample opportunity for growth. Pre-settlement funding is an underutilized and underappreciated business development tool for law firms. Unlock your firm’s potential. Contact Capital Financing today to learn more about how attorneys benefit from legal funding.