Litigation Financing

When Litigation Financing Is a Problem

Litigation financing is always questionable unless the plaintiff is wealthy and has unlimited funds. Even a "small" case has a list of expenses that is mind-boggling to a layperson with no previous experience with lawsuits. Fees for filing documents, expenses for depositions, copying, expert witnesses, investigations--these costs can amount to thousands of dollars that many people cannot afford to spend on legal matters.

Even with a strong case, a plaintiff cannot be certain of the outcome of any lawsuit. This in itself may make a person reluctant to gamble hard-earned money by filing a personal injury lawsuit, for instance, against a business with a bevy of available lawyers. With limited financial resources, many people simply cannot sue for damages to assist them in living with their injuries.

Legitimate Attorney Assistance

Even though attorneys are prohibited from making a lawsuit cash advance, they do pay the legal expenses when a plaintiff cannot afford to. Larger firms may use their general operating account; smaller firms may use their assets as collateral for loans. All of this is done with the expectation that the lawsuit will win and the litigation financing will be repaid by the plaintiff from the settlement or judgment proceeds.

These expenses are in addition to a contingency or hourly fee charged for attorney services. If the plaintiff cannot even contemplate such an outlay of money, or if the settlement will not likely cover all of these bills, a lawsuit will not be filed, or will be dropped. With the possibility of litigation financing from funding groups, the plaintiff may yet be heard in court.