litigation finance

Ten Things: Litigation Financing – A Primer for In-House Counsel

It is a common refrain in legal departments all around the globe: how do we get enough money to do the things we need to do to protect the company?  There are always more matters clamoring for money than there is money available.  This is especially true with litigation.  If your company is being sued, you have little choice other than to spend the money needed to defend your interests (unless you feel a quick settlement is a better call).  If the company has meritorious claims, then it often faces the difficult choice of whether to spend the money needed to proceed.  If not, valuable claims may be lost.  If yes, then money that could be spent on other parts of the business is re-routed to legal fees – and, unfortunately, under accounting rules money “invested” in a litigation claim is not treated the same as money invested in the business generally.  To deal with this, in-house legal departments try a variety of measures to reduce legal expenses, from reduced hourly rates or fixed fees to contingency fees and blended rates or less expensive counsel.  See my blog post on effectively managing legal spend.

Over the past four or five years another potential solution has emerged.  Depending on which side of the table you are sitting, the solution is either a blessing or the manifestation of supreme evil.  The solution is called “litigation financing” and it is something every in-house counsel should be aware of and thinking about.  This edition of “Ten Things” will give you an outline of the basics around litigation financing:  (more…)

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