What is litigation funding
With litigation funding, a third party-the litigation funder-pays the costs of a trial or lawsuit in which it is not itself involved as a litigant. The litigation financier is an investor, who believes in a positive outcome of the lawsuit and makes a risky investment in it. He pays all litigation costs, that is, all costs associated with taking legal action. These are, of course, costs of hiring a lawyer, but also bailiff fees, monies to be paid to the court (court fees), any costs of hiring an expert, etc.
Litigation funding allows companies and individuals to litigate without incurring significant financial risk themselves. If the lawsuit is lost, nothing needs to be paid to the litigation financier. If the lawsuit is won, the investor receives the funded costs back and also a percentage of the proceeds.
For what type of business?
Litigation funding is available for all kinds of cases, for individuals and businesses, as long as there is a claim expressed in monetary terms. The obvious thing to think about immediately is to hire a litigation financier for the “simple” collection of one or more debtors who do not want to pay. Or in case a business relationship ceases to honor the agreement causing a company to suffer damages. But litigation funding is also possible to recover damages suffered because competitors formed a cartel. Or when a patent is infringed. Or when a permit, grant or funding is unfairly revoked. Litigation funding can also be used in inheritance and divorce cases, for example.
In short, litigation funding is available in virtually every area of law.
Finally, litigation funding is also used to pursue class actions, in which an individual may have a relatively small interest, but together with a large group of similarly aggrieved individuals, a large claim can be brought.
Litigation funding can be involved at any stage of the proceedings. So even if a procedure is already underway. However, even when a claim has been dismissed by the court and the litigant wishes to appeal that judgment, a funding request can still be made.
How does it work?
In English, litigation funding is called “Third Party Litigation Funding.” This term clearly conveys that the litigation financier does not take over the claim, but becomes involved in the proceedings as a third party. The company retains ownership of the claim and thus remains a litigant. The latter is assisted by the by his own lawyer. That attorney’s bills (and other expenses) are paid by the litigation funder. To this end, an agreement is made between the client and the process financier, whereby the risk of investing in the procedure shifts to the process financier. If the company loses the business then it does not have to bear any (or less) costs. For the litigation financier, this is an investment with an uncertain return.
Of course, before deciding to enter into the agreement (definitively), the litigation financier will investigate the claim, the underlying facts and the evidence present, so that he can make an assessment about the chances of litigation to be initiated. This examination is usually free of charge. Only cases that the litigation funder estimates could be successfully completed are eligible for funding. Furthermore, the other party’s affluence is also considered. Only when it appears that an opposing party offers sufficient recourse for the claim will financing be possible. Furthermore, litigation financiers operating in the Netherlands set requirements for the minimum amount of the claim. At Liesker Procesfinanciering, the lower limit is at
€ 1.000.000,-. This is a high amount; but it is necessary given the significant cost of litigation in the Netherlands and our intention to achieve an attractive revenue model for all involved.
The lawsuits invested in are very carefully selected by our collaborative partner Liesker Procesfinanciering. In doing so, both the legal feasibility and the financial (far) feasibility are reviewed by Liesker Procesfinanciering’s investment committee, consisting of senior former lawyers and former judges. Liesker Procesfinanciering is the oldest litigation financier in the Netherlands, with a proven excellent track record.
Litifund’s board of directors tests whether a case also fits budget-wise within Litifund’s policy and makes the final decision.
If you have or know of a potential claim that may qualify for litigation funding, please contact Liesker Procesfinanciering.
Litigation funding especially offers you many opportunities
Litigation funding increases access to justice and eliminates (financial) inequality between litigants. If a claim is sufficiently likely, there is an additional opportunity through litigation funding to make the difference between being right and being vindicated. Not only through financial support, but also through the professional guidance provided by Litifund and Liesker Procesfinanciering, which strengthens the legal team and significantly increases the likelihood of a successful outcome.
As an investor, through Litifund’s bond funds, you have the opportunity to co-invest in litigation funding.