How Lawsuit Financing Safeguards Your Company

Companies cannot run away from lawsuits. Some companies, especially large ones, even have multiple lawsuits going on at the same time. Your company could get caught up in lawsuits under the following circumstances:

  • Disgruntled employees could file lawsuits for unlawful termination, sexual harassment, discrimination in the work place or injury during work.
  • Customers will sue when your products underperform or cause injury to them.
  • If a party is infringing on your intellectual property rights, you could file a lawsuit that seeks to protect your intellectual assets.
  • Disputes involving land that your company has full ownership of is cause for litigation.
  • When suppliers or partner companies contravene contract terms, you could sue them for damages.
  • If a company’s negligence interferes with your company’s ability to conduct business. An example is the oil spills that happen in coastal areas and result in loss of business for days or even months.
  • Cases of fraud or embezzlement.

When your company faces a lawsuit, you can use litigation finance to access money to pay your attorneys and to cover for other expenses incurred during the lawsuit. Lawsuit financing has grown out of the need to get a cheaper alternative to the contingency billing system traditionally used by lawyers.

There are those who argue that there aren’t enough lawsuit funding companies to satisfy the demand for funding. This claim is however not entirely true because there are companies that can fund cases in the billions of dollars.

Nonetheless, it is prudent to do your homework by talking to any litigation funding companies existing around you to assess their capacity to fund your company’s lawsuits.

Why should you should use litigation finance

The foundation of litigation financing is that lawsuits are too risky for any company to fund from its own cash reserves.

Financing gives you the following advantages:

  • Your business will not go bankrupt or suffer financial setbacks.

Lawsuit financing will enable you to pursue a case without risking your business. Some companies that have gone the route of funding lawsuits by themselves receive huge financial blows.

By the time the case concludes, you will greatly feel the impact of the lawsuit to your company’s finances. It is not unheard of that a company has had to declare bankruptcy by the end of a lawsuit.

Before you decide to go it alone, you need to account for the fact that your lawsuit could drag on for months, even years. In the meantime, your lawyer will keep billing you.

  • You can afford to pursue a case of any size. If your company is small to medium sized, having access to financing provides the ability to pursue cases against larger companies.
  • The case becomes like an asset that is capable of attracting financing.
  • You get to spread the risk to your company by avoiding litigation expenses.
  • You can concentrate your budget on running your business as opposed to funding lawsuits.

Lawsuit funding is an arrangement that is continually gaining favor among lawyers. Law firms have full knowledge of the desire by companies to reduce their legal expenses but still be able to access the best legal representation. When hiring a lawyer, make sure they are open to using litigation funding, as this will greatly help your business.

About the author

Isaiah Dunham owns a medium sized company. He was recently embroiled in a lawsuit regarding patents for one of his company’s inventions. He learned a lot from his experience dealing with lawsuit funding companies and he has decided to share his experience with others like him. Visit his website to read more.


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