As Litigation Finance grows in popularity and sophistication, not everyone is on board just yet. In fact, some clients and even their legal teams aren’t sure how to attract the interest of an experienced litigation funder. As the practice grows in use, understanding it becomes even more important.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
As Litigation Finance grows in popularity and sophistication, not everyone is on board just yet. In fact, some clients and even their legal teams aren’t sure how to attract the interest of an experienced litigation funder. As the practice grows in use, understanding it becomes even more important.
Lesa Online explains that there are some things funders look for when vetting any potential funding opportunity. This generally begins with an NDA followed by a thorough vetting. This due diligence may include looking into the viability of case theory, the defendant’s ability to make good on an award or settlement, and the evidence itself. Time, cost, and expenses are all considered, including the possibility of security for costs. How is this broken down?
- Merits. The case should have a very high probability of success based on applicable law and existing evidence.
- Damages. A sound theory of damages must be present and is typically valued using the most conservative estimates.
- Budget. How much will the case cost? A viable case must have a solid ratio between what will be spent vs a potential reward.
- Ability to pay. Regardless of merits or proven damages, if the defendant cannot reasonably pay the award, funders will not be interested.
- Adverse costs. Cost exposure is an essential aspect to consider when vetting any case for funding. Insurance is often applicable here as well.
