A Mutually Beneficial Approach to Litigation Funding

Discussions around the use of litigation funding often focus on the individual relationships between funders and law firms, or between funders and the claimant, and evaluate these dynamics in isolation. A new blog post takes a step back and looks at the harmonious and mutually beneficial relationship between all three of the core parties, in what it describes as ‘The Litigation Funding Triangle’.

An article published on LinkedIn by Mustang Funding examines the funder’s approach to working with clients and law firms, explaining a holistic methodology that is founded on the idea that no funding deal should move forward without the certainty that is wanted by, and beneficial to, all parties. 

Mustang begins by noting that one of the core issues that can arise with third-party funding is a situation where litigation is funded and reaches a successful conclusion, but it only amounts to a ‘pyrrhic victory’ where the plaintiff is left with little in terms of financial compensation. Mustang argues that this bare minimum approach to funding is ‘entirely unethical’ and that funders should equally weight both the probability of success and the probability of the claimant receiving tangible financial benefits.

Alongside the value to the plaintiff, Mustang points out that the use of funding should also come as a benefit to the law firm involved, thereby allowing counsel to focus on securing the maximum award for their client without concerns about capital shortcomings increasing pressure to reach an early settlement. Mustang concludes by stating that not only must funding be mutually beneficial to all parties, but its use must also be wanted by all parties and not imposed by either the client or counsel without mutual agreement and approval.

Discussions around the use of litigation funding often focus on the individual relationships between funders and law firms, or between funders and the claimant, and evaluate these dynamics in isolation. A new blog post takes a step back and looks at the harmonious and mutually beneficial relationship between all three of the core parties, in what it describes as ‘The Litigation Funding Triangle’.

An article published on LinkedIn by Mustang Funding examines the funder’s approach to working with clients and law firms, explaining a holistic methodology that is founded on the idea that no funding deal should move forward without the certainty that is wanted by, and beneficial to, all parties. 

Mustang begins by noting that one of the core issues that can arise with third-party funding is a situation where litigation is funded and reaches a successful conclusion, but it only amounts to a ‘pyrrhic victory’ where the plaintiff is left with little in terms of financial compensation. Mustang argues that this bare minimum approach to funding is ‘entirely unethical’ and that funders should equally weight both the probability of success and the probability of the claimant receiving tangible financial benefits.

Alongside the value to the plaintiff, Mustang points out that the use of funding should also come as a benefit to the law firm involved, thereby allowing counsel to focus on securing the maximum award for their client without concerns about capital shortcomings increasing pressure to reach an early settlement. Mustang concludes by stating that not only must funding be mutually beneficial to all parties, but its use must also be wanted by all parties and not imposed by either the client or counsel without mutual agreement and approval.