Developments In Corporate Litigation Finance

Litigation financing began some years ago as a tool for financially stressed or insolvent businesses that had potentially valuable legal claims. Now the process has become mainstream, it has generally received judicial approval, and there are dozens of major funders operating worldwide. For those funders, the next frontier is the deep-pocketed companies – the “blue chips and multinationals” – to whom they are making the case that what they offer is just another form of corporate financing, for working capital, business expansion or other purposes. Funders have made adjustments as they enter that market and are offering such variations as “portfolio funding,” as opposed to the funding of individual lawsuits. Litigation funding is really a form of insurance, and now some mainstream insurance companies are creating their own products. What is clear, write Brett McDonald and James Blick in this Today’s General Counsel article, “is that the wider litigation risk-management market encompassing litigation finance and insurance is a rapidly evolving space, offering a wide range of ways for a business to finance, control, monetize or take the risk out of litigation. When analyzing the cost/benefit of pursuing litigation, these options should be a routine consideration for general counsel and financial controllers.”