“Litigation finance” is the transformation of cash flows where the ultimate payouts will result from a legal outcome.
The typical arrangement involves providing capital to pay for the costs of pursuing a legal claim (law firm fees, experts, any court costs) in return for a share of the proceeds generated by that case.
Legal claims are assets with future payoffs that can be brought forward in time by appropriately pricing the risk, unlocking value.
Financing of legal risk presents real benefits for both law firms and companies engaged in commercial disputes. An agreement can be struck anywhere in the life of a case from pre-filing to post-settlement or post-judgment.