What is Litigation Finance?

In exchange for a share of monetary recoveries, litigation finance provides capital for legal costs while delivering strategic impact by mitigating risks, controlling expenses, leveling the playing field, and strengthening claims. Read on to learn how.

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ARTICLE SUMMARY

• Unique Benefits and Advantages: Understand the strategic impact of litigation finance, from risk mitigation to leveling the legal playing field.
• Experts’ Take: Why litigation finance is becoming an essential tool for legal departments and plaintiffs seeking justice.
• Implementation Guidance: Step-by-step process for securing litigation finance, from case evaluation to repayment.
• Evaluating Funders: Key criteria for choosing a litigation funding partner, focusing on due diligence and non-controlling agreements.
• Siltstone Capital’s Expertise: Specialized experience in providing litigation finance through the Litigo Financial platform.
• Contact Us: Learn how partnering with Siltstone Capital can empower you to pursue justice without compromising financial health.

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Siltstone Capital offers litigation financing through its proprietary online investment platform, Litigo Financial. Litigo allows qualified plaintiffs fast and efficient access to non-recourse capital for commercial litigation. With seasoned legal and investment expertise, Siltstone Capital assesses case merits and provides funding through Litigo across a variety of disputes nationwide.

A Powerful Financial Tool for Accessing Justice

With this foundational understanding, let’s delve deeper into the broader implications and significance of litigation finance. At Siltstone Capital, we believe litigation finance is an invaluable modern innovation that levels the legal playing field. Our litigation funding expertise helps clients access justice by financing legal costs in exchange for a portion of any settlement or award.

Having established its importance, it’s essential to understand the mechanics behind litigation finance.

What is Litigation Finance? An Introduction

Litigation finance is the practice of an unrelated third party providing capital to a plaintiff to fund litigation expenses in exchange for a share of any monetary recovery. This third party is known as a litigation funder.

It’s usually structured as a non-recourse investment, meaning the funder only gets repaid if the case succeeds. The funder receives payment before attorneys and the plaintiff. 

This financial tool lifts the burden of legal costs, reduces risk, strengthens cases, and promotes fairer outcomes. Litigation finance has become an essential resource for legal departments and attorneys seeking justice.

Now that we’ve explored the core concept, let’s unpack the myriad benefits that litigation finance offers.

The Multifaceted Benefits of Litigation Funding

Partnering with experienced litigation funders unlocks a suite of strategic advantages for plaintiffs:

Mitigates Financial Risks: Funding transfers downside risk to the investor, allowing plaintiffs to avoid catastrophic losses.

Levels the Legal Playing Field: Funding neutralizes opponents’ financial leverage and evens the odds for plaintiffs.

Lifts the Burden of Legal Costs: Funding shifts substantial litigation expenses onto the funder’s books, improving plaintiffs’ finances.

Enables Seeing Cases Through: Financing provides staying power to vigorously pursue claims without budget concerns.

Discourages Frivolous Litigation: Thorough vetting by funders may deter defendants from pursuing frivolous suits.

Provides Access to Justice: Funding promotes justice by enabling plaintiffs to pursue rightful claims regardless of costs.

Generates Potential for Significant Recoveries: Robust, well-funded cases are better positioned for substantial recoveries.

Transforms Legal Departments: Shifting expenses off books while securing revenues allows legal groups to become profit centers.

Access to Additional Resources: Funding provides plaintiffs access to legal resources and industry expertise.

The strategic power of prudently leveraging litigation funding is clear. As this financial innovation gains mainstream traction, its multifaceted benefits should appeal to executives analyzing the value of legal action.

While the benefits are evident, it’s equally crucial to see how litigation finance stands as an alternative to traditional legal funding methods.

Navigating Legal Disputes – Litigation Funding as an Alternative

For businesses, legal disputes and lawsuits are unavoidable. From contractual breaches to IP theft, conflicts arise regularly across industries.

Traditionally, when legal clashes emerged, companies had limited options: They could hire counsel, but at expensive hourly rates which is costly for long, complex cases; they could find lawyers willing to take contingency fees which is risky, if the case is unsuccessful; or, they could settle or abandon claims, which often means forfeiting rightful recovery.

Upfront legal expenses can be a substantial burden, especially for smaller companies or startups. Savvy defendants often exploit this by dragging out cases to drain plaintiffs’ resources. 

For corporate legal departments, managing litigation under the traditional options has downsides as legal costs can become overly burdensome. Lawsuits transform into cost centers rather than revenue drivers, and this lack of funding prevents pursuing rightful claims.

This is where litigation funding provides an alternative approach. With litigation finance, third-party investors provide capital to cover legal costs in exchange for a share of any settlement/award.

This transfers certain litigation risks and expenses from plaintiff to funder. In turn, plaintiffs gain the financial backing to build strong cases and see them through to conclusion.

Funding can also help law firms expand their market share by enabling alternative fee arrangements and financing cases the firm otherwise couldn’t support.

While litigation funding has its own complexities, for certain companies it can help:

• Transfer financial risks of legal action to a third party.
• Relieve some of the burden of legal expenses.
• Improve corporate financials by shifting costs off books.
• Level the playing field against well-resourced opponents.

In the right situations, partnering with seasoned litigation funders can provide businesses a viable alternative to traditional options when navigating disputes.

Understanding the advantages is one part; let’s walk through the actual process of securing litigation finance.

The Step-By-Step Process of Litigation Funding

Securing litigation financing is a strategic process that requires careful consideration. Here is an in-depth look at how these arrangements typically work:

1. Evaluating Legal Claims
The first step is for the plaintiff to thoroughly evaluate their legal claims and assess the estimated costs of pursuing action. Strong cases with high certainty of liability are best suited for outside funding.

2. Plaintiff Seeks Financing 
Once identifying a viable claim, the plaintiff can begin discussions with litigation funding firms. The plaintiff provides key case details, such as alleged damages and legal expenses.

3. Funder Performs Due Diligence
Experienced litigation funders undertake rigorous analysis of case merits, estimated damages, legal team expertise, and more. This due diligence process ensures the funder only takes on cases with excellent chances of success.

4. Financing Agreement Reached
After completing due diligence, the funder and plaintiff negotiate the financing terms. This includes the amount provided and the funder’s percentage of any rewards. The terms are formalized in a Litigation Funding Agreement.

5. Plaintiff Pursues Case Using Funds
With financing secured, the plaintiff pursues the case using the incoming capital to cover legal costs like attorneys, discovery, experts, and other expenses.

6. Case Concludes – Funder Gets Repaid
If the case succeeds, the funder receives repayment of capital deployed plus their contracted percentage of rewards. The remaining proceeds are distributed to the plaintiff and legal team.

Customization

The funding can be customized to particular needs, like covering legal expenses like lawyers, court reporters, appeals. It also provides working capital to maintain operations throughout protracted cases.

This flexible dual-purpose funding empowers plaintiffs to vigorously pursue claims without compromising their financial health. When approached strategically, litigation funding can empower plaintiffs to pursue justice by providing vital capital while shifting key risks to the funder’s balance sheet.

With the process clarified, one might wonder: what types of cases are typically funded? Let’s explore.

Case Types Funded – Broad Investing Across Case Disputes

At Siltstone Capital, our experienced team offers particular expertise in litigation funding for disputes across the energy sector value chain. But in general, we provide funding through our Litigo platform for a wide spectrum of commercial litigation for patents and energy.

The case types ultimately funded are based on careful analysis of each claim’s individual merits, not the specific area of law. Through prudent underwriting, Litigo and Siltstone Capital provide financing for high-quality cases across many dispute types.

Some examples of successful cases funded by Litigo include:

Litigation financing can be structured using contingency fee or hourly billing arrangements depending on the circumstances.

By evaluating cases individually and funding only quality claims, Litigo enables more plaintiffs to vigorously pursue justice. The choice of a litigation funding partner is critical. Siltstone Capital combines investment expertise with legal acumen to fund prudent cases through Litigo.

While a variety of cases can be funded, the choice of a litigation funding partner is paramount. Keep reading to know what to look for.

Vetting Litigation Funding Partners 

Given the high stakes, partnering with reputable litigation funders is critical. When evaluating firms, attorneys should watch for:

Rigorous Due Diligence 
The best funders undertake exhaustive due diligence before investing in any case. While frustrating amidst litigation, thorough underwriting demonstrates a diligent partner.

Non-Controlling Agreements
Ideal funders do not attempt to control or direct litigation itself. This maintains proper legal ethics. Control efforts indicate problematic partners. 

At Siltstone Capital, we check both boxes:

✅ Our seasoned legal team performs exhaustive due diligence before taking on any case. We invest significant resources evaluating merits and risks to ensure prudent decisions.  

✅ We structure agreements to provide financing only, without any control over litigation strategy or management. Plaintiffs maintain full autonomy over their case.

Choosing the right partner is a critical step. As we conclude, let’s reiterate the overarching value of litigation finance and how Siltstone Capital can be your trusted ally in this journey.

Siltstone Capital – Your Trusted Litigation Funding Partner

At Siltstone Capital, our experienced team provides insightful legal analysis to identify high-value lawsuits for funding highly complex litigation matters such as patent infringement, and breach of contract. We offer prudent, non-controlling financing, robust due diligence, expertise in energy and tech disputes, and access to extensive capital.

Our priority is equipping plaintiffs to build strong cases while protecting high ethical standards. We believe litigation funding levels the legal playing field and promotes justice.

Partnering with us means:

• Transferring Downside Risks – Our capital absorbs potential losses.
• Lifting the Cost Burden – Shift expenses to improve financials.
• Withstanding Delay Tactics – Prevent legal stonewalling.
• Strengthening Claims – Build robust, well-resourced cases.
• Gaining Access to Justice – Pursue rightful claims regardless of costs.

Don’t let lack of funds prevent justice. Gain the winning edge that our expertise provides.  Contact Siltstone Capital today to evaluate your case’s potential and unlock the strategic power of litigation finance.