A big part of the value of litigation financing is that it enables companies to pursue or defend litigation when they may not be able to otherwise.
What is the downside?
Downsides happen when there is a mismatch between the above value proposition of finance litigation and your situation. If there is a litigation matter that holds little value if pursued, using litigation finance to pursue every possible lawsuit is probably ill advised. When your company’s rights are clearly being ignored or abused, litigation financing gives you options.
Another time that there is a mismatch between using funding for lawsuits is if your case is so air-tight; and your ‘opponent’ is not well funded or savvy at all. These occasions are rare, and if the risk to your company is extremely small in pursuing litigation; financing the litigation may be unnecessary. Of course, even in these situations, you typically want to determine if the capital you would outlay into the lawsuit might better perform if invested into your operations or growth efforts. To determine this, use our Free Worksheet: Litigation Finance Worksheet
If you have an attorney who is extremely competent, hardworking, will treat your case as if you’re a paid client; and will take it on contingency, or you are sitting on so much cash that litigation wouldn’t even register… then you are the envy of many business. Sharing your litigation profits might not make sense in this scenario.
Back to the real world, for most companies it can be extremely useful to find the best attorney; have a litigation finance company verify your case’s chance of success; and put up the capital on your behalf.