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0 Litigation funding exists to help claimants access the legal system and fund necessary litigation. It is a form of finance that has gained increasing acceptance in the UK, US and Australia in the past few decades, and it is now being widely adopted as an enabling mechanism of the legal system in other parts of the world. But what are the benefits of this type of funding? Let’s take a closer look.
Risk Mitigation
One of the key benefits of litigation funding from a provider such as //www.novo-modo.co.uk/litigation-funding, is that it reduces the financial risk of litigation. With non-recourse litigation funding, which is generally the most commonly accepted form, there is only a repayment if the claim is successful and damages are awarded. Then, the funding is repaid through the proceeds awarded from the judgment.
Access to Litigation
Litigation finance ensures that people can pursue litigation when they have legitimate claims. This includes individuals and small businesses who may not otherwise be able to meet legal fee costs, especially without access to public funding.
Cash Flow Preservation
With litigation funding, capital can be retained. This is vital for businesses that need to keep their cash flow healthy to operate. The funding allows them to pursue necessary litigation, particularly in instances where the cost of doing so would be unviable.
Benefits to lenders
Litigation funding also gives investors the chance to extend their portfolios into a non-traditional asset class, which moves away from equities, property, bonds and other more familiar asset classes. For many investors with a higher appetite for risk, this type of financial product can offer healthy returns, especially as products will be financed and weighted according to risk and reward, as with all other types of financial investment.
In short, litigation finance is a beneficial form of specialist finance that can offer advantages to claimants, the legal profession and investors alike, helping necessary litigation to occur when it has merit in doing so. It is expected to become increasingly common in the coming years, as awareness and lending facilities grow.
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