Third-party litigation funding is an increasingly popular method of financing legal disputes. It is where a third party provides financial support to a person involved in a lawsuit, also known as a litigant, in exchange for a share of the proceeds from that lawsuit. This arrangement is particularly useful for individuals or businesses that lack the financial resources to pursue a legal claim, enabling them to access justice without bearing the full financial risk.
How does third-party litigation funding work?
In a typical litigation funding arrangement, a funder assesses the merits of a case and agrees to cover any legal costs, such as lawyer fees, court fees and expert witness expenses. In return, the funder receives an agreed percentage of any financial award or settlement.
If the case is unsuccessful, the funder usually bears the loss, meaning the litigant is not required to repay the funding. This non-recourse nature of litigation funding makes it an attractive option for claimants who want to mitigate financial risk while pursuing justice.
Earlier this year, the UK Government announced a new law to facilitate third-party litigation funding, highlighting its growing importance. The law aims to make it easier for individuals to secure funding for legal claims against powerful corporations. This initiative is part of a broader effort to support the UK’s £34 billion legal services sector.
Benefits and Considerations
Third-party https://www.novo-modo.co.uk/ offers several advantages. It levels the playing field, allowing claimants to challenge well-funded opponents. Additionally, it enables claimants to pursue meritorious claims without the burden of upfront costs which can be prohibitive.
However, it is essential to understand the terms of the funding agreement. The proportion of proceeds that funders claim can vary, and in some cases, may be substantial. Therefore, claimants should carefully evaluate the potential financial outcomes and seek independent legal advice before entering into such agreements.
In conclusion, third-party litigation funding is a valuable tool for accessing justice, particularly in complex and costly legal disputes. By providing financial support, it empowers individuals and businesses to pursue their legal rights without the burden of financial risk.
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