When you move to court either as a plaintiff or a defendant, one primary concern is the court process’s cost and other costs that you consequently incur. Many people may not have the financial strength to fight for their justice or defend their rights without the necessary financial muscle to take one through the process. Hence the funding of litigants is essential in ensuring the litigants pursue their legal course to the end without being forced by their financial circumstances to quit along the way.
Litigation funding or legal financing is the provision of funds or capital by a third party professional funding company to a litigant, plaintiff or defendant, without financial strength to pursue their legal requirements. In return, the litigant pays part of what they receive when the case settles to the funding company.
Benefits of Litigation Funding
The funding company provides funds to benefit the litigant; however, the funding benefits cuts across all the involved parties, the litigants, the attorneys and the funding companies.
1. Improves Access to Justice
Litigation funding is essential for litigants with little or no financial means to help them access justice. Legal financing ensures fairness and efficiency in legal representation by enabling access to legal information and necessary assistance to the needy litigants. Thus legal funding leads to an increase in the number of people accessing legal justice and ultimately get compensation.
2. Enhance Quality of A Legal Representation
Litigants without financial empowerment may not be able to hire a good layer. Thus, the litigants can afford a good team of lawyers to help seek justice or defend their rights with the funding. Without litigation funding, most plaintiffs and defendants would not be in a position to hire an attorney for their legal representation.
3. Lifts Financial Burden from The Litigants
Providing legal funding to the impecunious litigants will help them continue their lives without worrying about their basic daily upkeep. Some litigants undergoing health challenges may even have worse financial burdens, which may not even give them a chance to pursue a court case. However, with litigation funding, the poor can access justice without worrying about their primary needs- food, medical, and transport expenses. The lifting of the financial burden through the funding gives the litigants peace of mind and hence a better chance to win their case.
4. Attorney Can Access Contingency Fees Earlier
A financially incapable litigant may not hire an attorney on their own or pay the legal contingency fees. However, with legal funding from the professional funding companies, a litigant can meet their daily expenses and pay their attorney some contingency fee as they await their case to resolve. Thus the attorney also becomes a beneficiary of the funding.
5. Accurate Case Analysis and Cost Evaluation
For the professional funding company to fund a case, the litigant must have a strong case, and the claim must be viable economically worth investment. Therefore, the funding company will usually analyze all the case parameters by engaging experts and legal software tools to predict the case’s viability. The analysis helps develop an accurate report on the possibility of the litigant winning the legal battle and the possible payout, thus enabling proper planning.
6. Enables Companies to Handle Complex Cases
Pursuing complex legal cases for companies can negatively affect their cash flow by draining their operating revenue to fund court cases. However, with legal funding, companies can access funds without affecting their finances and company operations. Secondly, litigation funding companies can afford a quality team of attorneys and hence the confidence of a successful outcome. It may be difficult for a company with a complex court case to come out successfully without a good team of lawyers representing them.
The legal process is an expensive affair and can be a nightmare for people who are not strong financially to seek legal justice. Equally, companies with complex court cases may pull down due to financial constraints brought about by the legal implications of such a complicated court case. Therefore, litigation funding is essential for a balanced and fair legal representation and outcome for both individuals and companies. United Nations member states have even concluded that legal financing should not be optional but fundamental to a legal system.