Lawsuit Financing

Written by Patricia Tunstall
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Crucial Lawsuit Financing

Lawsuit financing by third parties is a mushrooming business that only gained prominence in the 1990s. There was and is a vital need for interim funding for plaintiffs whose own funds are depleted. Justice may be blind, but justice costs money. Individuals who cannot pay for their claim to be heard in court have no chance to get compensation for injuries, or to pursue a medical malpractice lawsuit.

To fill the need for outside assistance, litigation financing groups have established thriving enterprises whose members view a deserving legal case as the plaintiff's asset. Upon agreement with the plaintiff and the plaintiff's attorney, these groups invest in the claim by buying an interest in it. Needless to say, since this is a business venture for the group, the members examine the case carefully to see if it has merit before deciding on lawsuit financing.

Attorney Independence

Even though attorneys are usually members of these investment groups, they do not affect the course of the lawsuit they are funding. Plaintiff's attorney still determines strategy along with the client, and still makes the legal decisions. The extent of the group's involvement in the case is to check with the attorney occasionally to determine the status of the court case.

Once contacted by the plaintiff, the group will need all case materials, which will be scrutinized carefully so the members can ascertain the legal strength of the claim. This is strictly a business investment for these financing groups, and once the members have established that a particular lawsuit is likely to succeed, their involvement is limited to the funding. The recent surge in the number of these lawsuit financing companies nationwide is evidence of the need and the rewards involved.


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