Generally, people are happy to discover there are investment partners who will shoulder the funds required for a business to pursue costly litigation. The risk of sharing wins is far preferable to the risks of not enforcing your rights in court. Doing so also allows you to keep your current capital available for business operations and expansion efforts.
However, there are some instances when litigation finance may not be the best route. When is that the case?
Litigation finance is a way to control risk. You are shielding yourself from wasting money on an unsuccessful lawsuit. You are saving money for deployment that would otherwise be tied up in court fees, legal fees, and attorney fees. Naturally, when it is not worth it, is when the risk is low.
- If you were 100% determined to file a lawsuit anyway, risk is not factored into the equation.
- If the case is almost certainly a slam dunk in your favor, the risk could be lower.
- If the chance that even though your case is iron-tight, there could still be unfavorable outcomes; yet your company is extremely risk tolerant; the weight of that risk is less.
- Finally, if the resources required for pursuing the lawsuits won’t negatively affect your business operations, opportunity or expansion in any way, then you are in good shape to pursue a lawsuit.
There you have it. You need a slam dunk case, a voracious risk appetite for the legal system, were determined to file anyway, and have enough money to not even notice large investments on your budget; then you may not need litigation finance.
For the rest of us living in reality, the stars don’t always align so generously. Companies can almost always better spend their capital. For the rest of us, even strong lawsuits carry risk and we care to account for that risk. It is important to speak with Late Harvest Financial or do your own calculations for your company’s specific situation before making a decision either way.