Commercial Loans: Litigation Financing
What is litigation financing?
- When a company is involved in a legal dispute such as a high-stakes litigation or arbitration, it might need a loan to have access to funds during the proceedings to pay for attorneys’ fees or to eventually pay off judgments.
- Litigation financing involves a third party (that is not a party or attorney involved in the litigation) providing capital to a party and/or its attorney in exchange for a financial interest in the outcome of the case.
Sample litigation financing programs
In this specialized area, the structuring of litigation financing varies greatly from situation to situation, but some common elements may include:
- The lender’s repayment is secured by and contingent upon a successful outcome of the claim.
- Financing is available from $500,000 to $10 million (or larger if there is a portfolio of multiple claims).
- Financing may be provided in a fixed, lump-sum amount or may be drawn down over time and tied to certain milestones such as legal fees incurred.
- Litigation financing programs are available to both plaintiffs and defendants.
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