Litigation Funding

What is Litigation Funding?

Litigation funding is an alternative investment in which a party, not related to the dispute, provides a litigant the capital to proceed with a case by a professional law firm. This frees the holder of litigation rights from having to bear all the costs of litigation, as well as the associated risks. In exchange, the investor receives a share of the proceeds deriving directly or indirectly from the dispute.

Litigation funding is not a new type of investment, in fact, it has been around for over 20 years. This investment offers a way for all litigants to have equal access to the legal system, regardless of their finances. Not only do individuals benefit from the litigation funding ecosystem, but so do Fortune 500 companies and institutions of all sizes.

The capital provided when investing in the handling of a legal dispute is used to directly pay some of the costs associated with the case, including lawyers’ fees, experts’ fees, translators and other advisors and professionals as well as other judiciary expenses. The litigation funds may be used to finance working capital for companies involved in litigations and reduce the negative impact of those whose rights have been violated.

Uneven access to the legal system

In many countries and jurisdictions around the world, access to justice requires abundant capital, as litigation tends to be expensive. Many factors make litigation expensive: lawyers' fees, investigation fees, statements, examinations, experts in different areas of knowledge, consultants, arbitrators fees, among others. In many cases, litigators cannot prepare their cases properly, as retaining professionals can become very expensive. Many claimants, who have a strong case tend to choose to differ or even abandon a claim because they lack the financing to support this expensive endeavor. It is common to see that there is a complete inequity in terms of the financial resources

Parties participating in Litigation Funding:

OWNERS OF INFRINGED RIGHTS

Claimants are either individuals or companies involved in litigation that require financial resources, either because they lack the financial resources commonly needed in litigation proceedings, or do have the resources, but would rather share the risk and the returns with third parties. To obtain more information on how RIDER can assist in connecting owners of litigation rights with investors and third-party investors, please click here.

INVESTORS

The investment in legal disputes constitutes a type of alternative investment that has been attractive to funds and to those who advise high-net-worth individuals and investment portfolio managers. This type of investment typically has returns higher than other investment alternatives. The RIDER platform helps connect approved investors with investment opportunities that have been previously vetted and analyzed by lawyers that are experts in the jurisdiction of the case and specialized in the area of law which is most relevant for each dispute.

To learn more about how RIDER can help you access expertly vetted legal investment opportunities with attractive returns click here.

LAW FIRMS

Law firms that are members of the RIDER ecosystem are reputable and experts in their respective jurisdictions and areas of practice. The opinion that the law firms provide, determines if a case is viable for financing.

The owner of litigation rights will have access to Legal Opinions at fees that are available in our network. Law firms that are members of the RIDER network, provide bids for their professional services at significant discounts thanks to the commercial relationship existing with RIDER.

In most litigation funding transactions, the law firm may act as custodian of the funds for all stakeholders (if so approved by the investors) and is entrusted with the role of distributing the proceeds upon a successful result.

For more information about the benefits that member law firms provide to clients and the benefits that RIDER provides to member law firms, click here.