Industry Overview

Litigation finance is the financing of a third party’s litigation in return for a financial interest in the outcome of the case, presuming there is a positive outcome.

The capital provided usually finances the payment of lawyer fees and out-of-pocket expenses necessary to pursue a lawsuit and sometimes can be used as working capital to ensure Plaintiff solvency during the course of the litigation process. Litigation finance investment managers typically look for alignment of interests between the plaintiff, the law firm representing the plaintiff, and themselves by ensuring that all parties have something at risk as they collectively pursue the litigation. For example, in certain circumstances, plaintiff’s counsel may undertake cases on a full or partial contingent basis, with the contingency representing their investment in the case (or ‘skin in the game’).

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