Have you ever heard of a secret weapon that regular people and small businesses can use to level the playing field in the world of lawsuits? It’s called litigation funding, like having a financial ally in your corner when facing a legal battle.
Imagine this: you’ve got a solid case, but the litigation costs are piling up, and the other side seems to have all the money to hire top-notch lawyers. That’s where litigation funding steps in, giving you a fighting chance without drowning in expenses.
But what exactly does litigation funding entail? In this article, we’re diving into the world of litigation funding – breaking down what it is, how it works, and why it might be the key to getting justice without emptying your pockets.
Defining Litigation Funding: What Is It and How Does It Help?
First things first: what is litigation funding?
Also known as litigation finance or dispute finance, litigation funding lets you team up with a finance provider ready to cover the money needed for a lawsuit. If you win, they get a piece of the proceeds.
With expensive and risky lawsuits, applying for commercial litigation finance is smart, especially if you don’t have the cash to take on a giant opponent or you’d rather use your money to run your business, not fight in court. It helps hedge the risk, making it less of a gamble to go to court, even if you’re up against a formidable foe.
In simple terms, litigation finance provides the cash for all the lawsuit bills and attorney fees. It keeps the case moving, so you can see it through to the end, whether that’s a court ruling or an appeal. This kind of backing can make or break a case, helping you fight for justice without breaking the bank.
Every litigation funder invests in specific types of lawsuits. Some fund cases like contract breaches, while others focus on business fraud and intellectual property claims.
But to understand the importance of litigation funding firms, here’s a quick preview of what’s involved in the litigation process.
8 Stages in the Litigation Process
To better understand the need for litigation funding, here are the general stages of a lawsuit. Remember, not all cases in the legal system go through each step, and a case can be settled anytime.
Stage 1: Investigation
Before the legal process formally starts, plaintiffs and their lawyers usually investigate and collect information. They talk to witnesses, collate essential documents, and might even call in a detective for backup.
Sometimes, they send a demand letter to the defendant, testing the waters to see if things can wrap up on friendly terms.
Stage 2: Pleadings
The plaintiff writes a formal complaint to the court detailing the harm they’ve suffered and lays out the important facts. The defendants have their turn to speak up in the form of an answer.
It’s like both sides getting to tell their side of the story.
Stage 3: Fact Discovery
Discovery is all about investigating and digging up the facts on the underlying litigation.
Both sides start asking for and swapping information regarding the legal claim. It involves passing around documents and interviewing people who know the story. This helps avoid any last-minute surprises and ensures everyone’s on the same page.
Fact discovery can take a while and cost a lot, especially with all the emails and files companies generate these days.
Stage 4: Expert Discovery
It’s time to bring in the experts — people who are deemed knowledgeable about the specific topic of the lawsuit.
In complex cases, experts are a common sight. They give their opinions on technical details, how much money should be paid for damages, or even the little details of a particular industry.
Like having a bunch of experts in your corner for a heated debate, they add firepower to the legal team’s arguments.
Stage 5: Pre-Trial
Both sides tackle the last-minute details during the pre-trial before they head into court. Lawyers might request a summary judgment or challenge the experts’ credibility.
As the trial date gets closer, things can get pretty intense. There are debates about what evidence can be used and even fights over how the jury should be guided.
This is also when parties often talk about settling things without a fight. The courts sometimes prompt them to consider settling instead of spending much money on a long and messy trial.
This stage can be exhausting and time-consuming, and it takes a lot of brainpower for the legal team to get everything lined up. Having some litigation funding agreements helps the legal team cover the legal fees, dive deep into research, gather evidence, and build a solid case.
Stage 6: Trial
Most cases don’t go this far, but the trial is like the ultimate face-off in court if things can’t be patched up earlier.
The trial can be a jury trial (where everyday people decide) or a bench trial (just the judge). It can go on for days, weeks, or even months, depending on how complicated the story is.
Stage 7: Verdict or Judgment
After the intense trial, where both sides give it their all, the jury or the judge sits down and deliberates about everything they’ve seen and heard. The jury or judge then announces their verdict or decision.
Stage 8: Appeal
During the appeal stage, the side that lost in the trial court can ask a higher-up court to take another look at what happened.
The result of this redo can go three ways: the original verdict stays, it gets flipped around, or it’s sent back to the first court to think over again. This whole process can take about one to two years from the time the trial ends.
How Litigation Funding Helps
For plaintiffs, litigation funders help out those who need more money to spend on a legal showdown. If they’re already knee-deep into the lawsuit but suddenly find themselves running low on funds, a litigation funding firm steps in and gives them an extra boost.
Lawyers and law firms benefit, too. They can take on cases from people who can’t usually afford their services. And when it comes to money, litigation finance helps with the nitty-gritty – paying for experts, covering expenses, and even making sure clients don’t run out of cash in the middle of the legal match.
With these benefits, commercial litigation funding arrangements level the playing field and ensure justice for everyone. It means that who wins or loses isn’t about who’s got more cash but about who’s got the stronger case.