Litigation Financing, also popularly known as ‘third-party litigation or ‘litigation funding’

Litigation Financing, also popularly known as ‘third-party litigation or ‘litigation funding’ is a non-recourse funding alternative wherein a party with no direct interest in an ongoing or potential litigation/arbitration funds the litigation/arbitration cost completely or partially and gets a portion out of the final claim in return. Litigation Funding helps in lowering the litigation/arbitration burden on the claimant as the cost of litigation/arbitration falls heavy on the pockets of claimants which is the biggest factor people worry about when it comes to lawsuits.

Litigation Financing

Litigation Financing is not only a boon for an individual claimant, it is also a great tool for start-ups and other businesses. Start-ups on any given day face a number of challenges in the attempt to make a name and sustain themselves in the market. These hurdles often get take the form of disputes and get routed towards the doors of the courts and tribunals. In India particularly, litigation is a lengthy and expensive process and for a start-up or for any business for that matter, having capital stuck in the process of litigation, which could otherwise be used to enhance the business, even if the final decree or award is in the favor of the claimant, is a loss. With the help of Litigation Funding, these business ventures with rightful claims do not have to fret over the litigation’s time span or cost involved because practically, nothing goes out of the pockets of the company and the business can continue to grow alongside without having to worry about the lost opportunity cost. Portfolio funding, wherein all the potential successful claims of a business are brought under one ambit and funded by Litigation funders, helps such businesses to curtail the litigation huddle with ease.

Litigation funders like LegalPay, are also capable of dealing with cross-border disputes and class-action claims. Because of the deeply embedded grip, they have in the market in terms of relations with international funders or other companies due to their goodwill, with the help of which all the potential funders and claimants can be brought together on the same lines with the help of contracts and class action suits can be initiated be it within the territory of India or cross-border involving claimants and funders from different countries.

In this ever-evolving business era with a new invention every day, the disputes rise at the same pace. Disputes are inevitable and embedded in the nature of mankind and business. It simply cannot be done away with. What can be taken care of is how such disputes are catered to so that the innocent party doesn’t have to face unnecessary mayhem and efforts that goes into proving themselves to be on the right lines. Litigation funding is one such way to minimize the claimant’s troubles. And even though this concept is nascent and needs a lot to establish itself, it can be said that its future of it is bright because as it is said, ‘where there is a lot of money involved, regulations follow’, it won’t be long before this gets regulated and established in India too.


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