Litigation finance is a form of corporate finance
Used by both litigants and law firms to pay for legal costs, legal finance is a fast-growing alternative to other means of financing litigation (such as self-funding or bank borrowing). The underlying asset is one or more legal claims. In its simplest form, the financing covers expenses related to litigation in exchange for a portion of the awarded damages or settlement recovery. More sophisticated options can provide even greater amounts of capital, allowing corporates and law firms to unlock the value in assets that are usually carried at zero, borrow on a non-recourse basis without increasing their balance sheet, and significantly improve EBITDA and share price by eliminating legal costs.
By taking on the costs and risk of litigation and arbitration, legal finance increases access to justice for aggrieved parties by enabling them to pursue meritorious cases using their preferred legal counsel. It levels the playing field between deep-pocketed defendants and smaller plaintiffs with lesser financial resources, and enables plaintiffs – and their law firms – to go the distance in pursuit of justice.
Who uses litigation finance?
- In-house corporate counsel, to reduce legal costs
- General counsels, to leverage legal budgets for maximum recoveries
- Finance executives, to reduce expense, to improve P&L and share prices, and to raise non-recourse financing from assets that are usually valued at zero
- Law firms that do not operate on a contingency model
- Law firms that lack access to the financial resources to pursue good cases
- Insolvent estates and their trustees
Litigation finance enables plaintiffs to pursue complex, meritorious cases that can cost millions of dollars and sometimes take years to litigate.
What does litigation finance pay for?
- Most clients use litigation finance to cover the direct costs of litigation and arbitration, including legal fees, due diligence, expert witnesses and other case expenses
- Bench Walk Advisors is flexible in how we structure each relationship, taking into account the circumstances of each case, our client and the law firm representing our client
- Bench Walk Advisors generally accepts all of the financial risk, in exchange for a percentage of the recovery
Bench Walk Advisors has the flexibility to finance single cases or a portfolio of cases, provide working capital to law firms of any size, and provide a wide range of other innovative financing solutions to corporates, financial institutions and law firms.
Why do litigants & law firms opt for litigation finance?
- Allows corporates and financial institutions to unlock undervalued assets and monetize claims
- Allows corporates and financial institutions to borrow on a non-recourse basis and therefore to avoid the adverse accounting impact of traditional sources of financing
- Allows corporates and financial institutions to improve the bottom line by eliminating or reducing legal spend and improving EBITDA and corporate valuations
- Increases the number of cases a company or law firm can afford to pursue
- Eliminates the risk of self-financing
- Allows non-contingency law firms to participate in cases they otherwise could not
- Gives plaintiffs more flexibility in choosing their legal counsel