Litigation Financing
Litigation financing is providing money to a plaintiff in order to fund a lawsuit in exchange for a portion of the award (if any) recovered during a trial. While the money is often used directly to pay for legal expenses, it can also be used to pay for a plaintiff’s ongoing personal or business expenses during the lawsuit.
Litigation financing is providing money to a plaintiff in order to fund a lawsuit in exchange for a portion of the award (if any) recovered during a trial. While the money is often used directly to pay for legal expenses, it can also be used to pay for a plaintiff’s ongoing personal or business expenses during the lawsuit.
Most litigation financing is done through what’s known as “non-recourse” capital, which means that investors only receive money if the case is settled or wins at a trial.
Litigation financing is a relatively young concept in the US, and as you might expect in the context of a conservative industry like the law, not everyone is a fan. A common complaint is that while they are technically not loans, the terms (especially when a case drags on for a long time) mean a big chunk might be taken out of the award, especially relative to the amount initially advanced to the plaintiff.
Currently there are three platforms in our database offering litigation investments: LexShares, YieldStreet, and Trial Funder.
Want to learn more but aren’t sure where to start? You can explore 168 crowdfunding investment platforms in our database and learn more about the nuts and bolts of crowdfunding and alternative investing on our blog. Did you know you can use a self-directed retirement account to invest in many alternative investments? Rocket Dollar makes it easy, and when you sign up using that link you'll be helping to support YieldTalk.
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