What is litigation financing?
It is a financial service which allows those undergoing litigation or arbitration to effectively manage their costs. These could be attorneys’ fees, cost of experts, court fees, and other expenses. There is even the risk of needing to pay for the other party’s legal costs if the suit is unsuccessful.
In the Anglo-Saxon world, litigation funding has been around for years. It has been used in the UK since 1967 and spread to other Western legal systems in the early 1990s. In the US, for example, litigation financing has totaled over $10 bil. In recent years, this practice has steadily become more and more popular in the Czech Republic.
Who is it for?
Litigation financing can be arranged not only for plaintiffs but also for defendants who may be subject of a series of potentially expensive lawsuits. Our clients are most often commercial businesses, law firms, or investors. In insolvency proceedings, the litigation financing from the investor typically also includes the financing of the insolvency manager.
Who pays for it?
Financování je poskytováno na základě takzvaného non-recourse principu. Pokud klient svou soudní při prohraje, investorovi - respektive financiérovi sporu - nic nedluží. Litigační financování není půjčka, která se musí vracet. Pokud klient spor vyhraje
- za finanční pomoci investora - náklady na při platí z části vysouzené sumy. A investor je odměněn za to, že nesl riziko,
a to podílem na vysouzeném plnění.
Advantages of litigation financing
Thanks to external financing, the client is able to increase his or her chance of success by, as an example, hiring better (i.e. more expensive) legal representation. Though a wide range of contacts, the investor can also help gather any missing and necessary information to strengthen the legal case. Litigation financing also has a psychological effect on the other party, typically discouraging them from artificially prolonging the dispute.
In the case of bankruptcy
Help from litigation financing is particularly important when companies face bankruptcy. If a company does not have the resources to protect its assets in court, and ultimately goes bankrupt, then the litigation financing investor also doubles as a strategic partner to improve business operations and increase the value of the company. If successful in court, the share acquired by the investor can actually end up helping the company via subsequent growth.
It goes without saying that our clients’ privacy is protected from the very beginning of the litigation financing process. Our team of experts will assess the risks of the case, how long it may take, as well as any potential financial complications. Mutual cooperation is encouraged by the fact that both parties are interested in seeing the case succeed in court.
Have questions about litigation financing?
Write to us, and we will respond as soon as possible.