Use Litigation Funding to Value Legal Claims as Company Assets

Inflation and the specter of a crippling recession loom large. In this light, executives and boards may opt to avoid the exorbitant cost and unavoidable risk of pursuing litigation. No lawsuit, no outside counsel fees, and no lost causes, right??

This strategic misstep can cause companies to miss out on much-deserved legal settlements and awards. Beyond that, failing to protect IP rights and other assets is a recipe for disaster.

Today, corporate lawyers and CFOs can turn to litigation funding to value their legal claims as assets, lower litigation risks, and safeguard upcoming settlements and awards. Law firms, too, are increasingly attracted to litigation funding to protect profits. These and other advantages make litigation funding a highly useful financial tool.

Litigation funding: A popular corporate finance tool

Litigation funding is an increasingly popular option for companies and law firms. Without it, they often cannot pursue high-value litigation against defendants with deep pockets.?

A contingency fee arrangement with a law firm paired with funding from a third party can put businesses in a peak position to benefit. Companies can shift litigation costs "off-balance" rather than paying and recording them as expenses. This lessens the impact of litigation costs on financial statements, helping companies maintain attractive leverage ratios.

Using litigation funding as a finance tool reduces the costs and risks to accomplish the desired legal results while maintaining the potential upside of successful outcomes. In other words, you get to have your cake and eat it, too.?

Litigation funding: A popular risk-reduction tool for law firms

For law firms, litigation finance can reduce the risk associated with the contingency-based model as it transfers much of the risk to the funder. It’s become an increasingly popular option as U.S. litigation funding companies committed $2.8 billion toward new deals in 2021, an 11% increase from the prior year, according to Westfleet Advisors' 2021 Litigation Finance Market Report.?

Law firms can receive a pool of money to pursue multiple lawsuits through “portfolio” funding. Firms can rely on the money to fund current and future cases, making it a strategic growth tool. For example, it enables lawyers to take on more cases and more complex lawsuits. Lawyers can use the funds to retain preferred experts, depose more witnesses, and pursue other legal objectives that help increase the odds of a successful outcome.

In addition, companies and firms can channel any capital they would’ve spent on litigation into growing their business. There are many ways to structure and benefit from litigation funding agreements. Contact Amicus Capital at 877-926-4287 to learn more now!