Things Businesses Should Consider Before Deciding to Take Litigation Finance
Business litigations are nothing new. Regardless of the niches and sizes, almost all businesses get sued at least one time in their life. Even though not all lawsuits are fatal ones, dealing with one is tough. Most legal matters take months to years to get resolved. And that means you may have to spend a huge sum to afford the legal assistance. Well, with litigation finance in the image, you no longer have to spend your personal finances on your litigation. You can fund it through a 3rd party and handle your business-related legal matters with someone else’s money.
Legal funding is a growing industry in the legal world. It allows people to access justice by offering them financial assistance. Hence, it can change the analysis of the claimants regarding when to bring claims and how to fund their businesses during the trial. But when you’re deciding whether to use the legal funding option for your business lawsuits or not, considering a few points is a must.
Wondering what are those? Well, let’s dive into the following blog post for more.
What should you consider before funding your business lawsuits with legal finance?
Litigation funding is one of the best ways to deal with litigation without exhausting your personal savings. But to structure such an arrangement to fund your business litigation through 3rd parties, you must consider how to protect sensitive business information and the impact of legal funding on your strategic decisions.
The following are some questions you should consider,
1. What information do you have to share with the litigation funder?
i) Most legal funding firms check the likelihood of achieving their desired payout, as they’re deciding to invest in a lawsuit. So, they often ask to share information like the experience of the counsel besides the posture of the case and key moment decisions.
ii) Besides that, funders often also ask for summaries discussed with or provided by counsels to check if the investment fits the criteria for legal financing.
2. Which funding-related information the adversary can retrieve through discovery?
i) If you’re about to share non-public information with a potential funder, ensure to have an NDA (Non-Disclosure Agreement) beforehand.
ii) Some courts have analysed that litigation funding option as other business transactions is not covered by lawyer-client privilege. So, businesses seeking legal funding options should only disclose commercial yet not privileged information with the funder.
3. What are there any rules on disclosing the arrangements of legal financing?
i) Since legal financing has become more common worldwide, some courts concluded that legal funding arrangements are irrelevant to the merits of a lawsuit and thus, should not be disclosed. While some other courts have taken the opposite view and established rules to disclose the litigation funding arrangements.
ii) Thus, before applying for legal funding options for dealing with business lawsuits, ask your lawyer about the litigation financing disclosure rules in your local court.
4. How can the litigation funding arrangement impact settlement strategies and decisions?
i) When dealing with your business litigation, you should consider provisions about controls over the actual court decisions and the potential impacts on the settlement and litigation resolution.
ii) Hence, before selecting a potential legal funder for business litigation, ensure to discuss whether the funder wishes to continue the litigation even when you wish to settle it or if they can be substituted as the claimant when you no longer want to continue dealing with the case.
Concluding with,
Wondering if getting a professional litigation finance option for your business lawsuit would be better or not? Well, it can allow you to finance your case through a 3rd party so that you can save your personal savings for other needs. But well, before you opt for this, ensure to consider a few things beforehand. We hope this blog can help you with that.