In the legal community, one topic that has been the subject of significant commentary in recent years is third-party litigation finance. Although litigation finance can take many different forms, the concept is relatively simple. In most instances, a third party provides funding to a litigant to pay for attorneys’ fees and other costs in exchange for an interest in the outcome of the lawsuit. Litigation finance thus allows parties to either pursue litigation that they could not otherwise afford, or minimize the risks associated with litigation by sharing the costs with a third party.

As recent studies demonstrate, there is good reason for the increased focus on litigation finance. A recent study conducted by ALM Media, publishers of the Daily Report, found that 36 percent of U.S. law firms used litigation finance in 2017, compared with 28 percent a year ago. The 2017 results also represent an astounding increase from 2013, when only 7 percent of law firms reported using litigation finance.

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