Litigation financing

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Litigation financing is a financial service provided by companies that specialize in assuming litigation costs for clients. For this purpose, the client enters a separate contract with the litigation financier.

No risk for the client
Lower profit for the client in case of success
Process financier gets a share of success
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A litigation financier assumes the financial risk of the litigation for the client. Legal fees, court costs and possibly costs for witnesses and experts are incurred in a lawsuit. The party who loses the lawsuit must also bear the costs of the proceedings. The litigation funding assumes the financial risk of losing the litigation. In return, he receives consideration in the event that the process is won by his customer. There are various process finance providers. On the one hand, these are legal expenses insurance. They offer their services outside of insurance activities. On the other hand, there are companies that specialize in litigation financing.

In order to receive a commitment for litigation funding, a funding application must be made. Many litigation funders have a minimum value in dispute. This means that only cases above a certain requested sum will be accepted. Litigation financing is also only possible for the party that demands a certain amount. Litigation financing is not possible on the defendant’s side. With the application, all necessary documents and correspondence with the opposite party are submitted. The litigation funder then reviews the case’s chances of success. If the litigation financier concludes that the matter is likely to succeed, he will assume the funding. Then the fee of the own lawyer and the court costs are paid first. If the lawsuit is lost, the litigation financier also pays the opposing lawyer.

In the event that the process is won and the client is awarded the requested and enforced amount, a financial consideration must be paid to the process finance provider. The amount is based on the amount awarded and varies, depending on the process financier.

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