Study after study shows that General Counsel are growing more and more interested in the product of litigation finance, yet the adoption rates remain low. There are numerous hurdles, not the least of which is cultural: many GCs simply retract from the idea that their role and responsibility should transform from cost container to revenue producer. That said, given the shifting economic climate, it’s worth taking another look at how litigation funding can benefit GCs and the balance sheets they are entrusted to safeguard.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
Study after study shows that General Counsel are growing more and more interested in the product of litigation finance, yet the adoption rates remain low. There are numerous hurdles, not the least of which is cultural: many GCs simply retract from the idea that their role and responsibility should transform from cost container to revenue producer. That said, given the shifting economic climate, it’s worth taking another look at how litigation funding can benefit GCs and the balance sheets they are entrusted to safeguard.
As reported in Crypto Coin Discovery, litigation finance helps move risk off the corporate balance sheet – not just litigation risk, but interest rate risk as well. Rates have whipsawed over the last year, and it’s getting more and more difficult to predict Fed moves and future outcomes. So if corporates want to hedge their bets here, freeing up capital by engaging with litigation funders is a terrific option, and one that provides increased flexibility as the interest rate environment continues to fluctuate.
Additionally, litigation finance is growing more sophisticated. Defense-side funding is slowly-but-surely evolving, and this is likely to spur more corporate interest. As corporates begin to bundle portfolios of plaintiff-side claims with defense-cases, expect the GC community to take notice. It’s one thing to try to sell GCs on the idea of turning a cost center into a profit center, it’s quite another to sell them on expanding their cost center, which defense-side funding is capable of achieving.
All of this comes in addition to the accounting and operational benefits that corporations accrue when engaging with funders. When times are good, perhaps these benefits are less substantial. But with the global economy on shaky ground, GCs should certainly take a closer look at all of their options.
