Common Misconceptions About Litigation Financing

Litigation funding, described as a financial advance on an expected positive outcome in a case, has become an ever-increasing resource for attorneys and clients who lack the capital to proceed with their cases. This allows for greater access to funds without impacting an ongoing litigation suit. As with anything, many myths around litigation financing exist that attorneys and clients should be aware of. Read about some of the common misconceptions about litigation financing.

It Can’t Help Cover Attorney Fees

All told, litigation financing is beneficial for attorneys. When it comes to using a third-party litigation financing company, many attorneys are afraid they can’t use it to cover their fees. The reality is that litigation financing can serve a variety of financing obligations. In addition to attorney fees, it can provide capital for business operations and other additional costs.

It Can Complicate an Ongoing Case

There are many ways litigation financing can help you succeed. Don’t worry that it will impede an ongoing court case, however. Litigation funding is not commonly discoverable in courts. More often, judges will find them irrelevant to claims and defenses. They may even protect them under a work product doctrine. This can differ from state to state, but for most cases, litigation funding remains irrelevant to the facts of the case.

It’s Expensive for All Parties

Another common misconception about litigation financing is that it’s expensive for all parties. Despite this misconception, that is not the goal of a litigation finance firm. The main objective is to secure funding through feasible terms. Lenders are not in the market to cause havoc and confusion. Instead, they will work with attorneys to provide the best financial arrangements on a given deal with respect to the case and ongoing capital. Each funder may offer a different arrangement, so research and scout for the best options available.