Law firms must be able to meet potential client demands to land desirable commercial litigation cases. Meeting those demands can be financially difficult during the often-lengthy process of discovery and litigation, sometimes even damaging a firm’s long-term business outlook.
Commercial litigation funding allows attorneys to accept the cases they want—by turning those cases into capital-producing assets that can serve firm financial needs right away.
Strong Cases Are Lucrative Assets
Companies in the US spend billions of dollars each year on litigation, and it can take years to resolve a commercial dispute. The ongoing costs of extended legal battles can deter attorneys and law firms from taking cases that are otherwise appealing.
Litigation funding allows law firms to take cases with the most overall potential, not just the ones that can be resolved quickly. These high-caliber cases can be lucrative and reputation-building.
Commercial litigation funding monetizes promising cases, creating working capital that a firm can use to cover the costs of litigation or other business expenses. This stream of income allows firms to take the best cases, employ quality staff, consult knowledgeable experts, serve clients better, and generally invest in growing the firm’s reputation and business.
Litigation Funding Basics
Lawyers and law firms can apply for litigation funding with the collateral of a single case or a portfolio of cases. This non-recourse funding is only repaid if the case or cases in question are won or favorably settled.
The application for funding can take place pre- or post-resolution. Post-resolution funding is particularly useful in cases in which the recovery of damages or awards is expected to be prolonged or delayed by appeal.
How to Use Commercial Litigation Funding
Law firms are at liberty to use the capital provided by litigation funding as needed. Possible uses include the following:
- Litigation costs and expenses;
- Overhead expenses;
- Firm growth;
- Legal research and discovery costs; and
- Expert witness fees.
This flexibility helps law firms better serve clients. A firm with positive cash flow won’t be pushed into premature settlement due to the financial constraints of extended litigation. And access to resources and staff to get the job done right means an increased likelihood of favorable outcomes.
Types of Commercial Litigation Funded
Commercial legal disputes are often complex and can result in high-value settlements or judgments. But to achieve that outcome, a firm must be able to support those cases financially until a successful conclusion is achieved.
Law firms use litigation funding to help shoulder the financial burden of all types of commercial litigation:
- Business torts;
- Corporation, partnership, and shareholder disputes;
- Intellectual property;
- Breach of contract;
- Domestic and international arbitration;
- Oil and gas; and
- Trade secret theft or misuse.
Law Firms Can Thrive with Funding from Pravati Capital