Posted on July 7, 2017
True-False: What You Think About Litigation Funding May Not Be Correct
Law firm financing has become an essential tool in the legal marketplace because of its ability to help sustain a plaintiff’s quality of life and pursue a case at the same time.
With Canada litigation funding to back you up, for example, you can afford to face your defendants and not worry about losing your home and your business because of a lengthy legal process.
For some reason, however, many individuals and companies have the wrong idea about litigation financing. Time to bust those myths.
6 Common Misconceptions about Financing for Law Firms
- It’s only available for specific case types
A lot of people believe that most of the cases that investors back financially are commercial in nature and mostly large-scale group actions. The reality is that, if there are monetary damages sought, a litigation financing company would be interested in the case.
There’s also the matter of case appetites, which usually vary between funders. What you think may be an excluded case type may not be the case for litigation investors. See more at Bentham IMF
- A case must meet a 1:10 ratio of costs to damages
Part of due diligence of third-party funding is to determine the viability of law firm financing. The end must justify the means, after all. But some companies, such as litigation Finance Bentham IMF, don’t always put a minimum ratio in assessing a case as they usually take a holistic approach.
- It’s only available for multi-million claims
Similar to the myth about specific case types, it is also not true that litigation financing is only applicable to cases where monetary damages go by the millions. This may have been the case before, but third-party funding is now available in a great range of amounts because the focus is on economic claims rather than big-ticket ones.
- There must be no option for private funding
Contrary to popular belief, litigation funding is not withheld for clients who can afford to privately pay litigation fees. Not everyone who has the financial resources would want to blow it on litigation expenses, anyway. In fact, a lot of SME clients would rather re-invest the money they have than finance their case. These days, people have the foresight to avoid litigation fatigue, where a plaintiff runs out of money, even if they had plenty in the beginning.
- It’s unnecessary for a law firm willing to do 100% DBA or CFA
The answer will depend on the appetite and ability of a law firm. But considering that there are still costs associated with counsel, court issue, and expert fees, partial funding from a litigation financing firm would prove advantageous, enabling a law firm to increase the number of cases they can handle and run on a deferred fee basis.
- It’s way too expensive
Although there is no single formula to determine how much third-party funding will cost a client, funders do not charge the same expensive rate. In fact, many law firm financing companies follow different pricing models, which means prices vary greatly across third-party fund providers. Some investor may charge a flat rate of interest, while others charge base on which is greater – a multiple of their committed capital or a percentage of the damages paid.
Now that you know the truth, don’t hesitate to contact Bentham IMF and consult them about your case. Click here for more information http://www.benthamimf.com/what-we-do/portfolio-funding