While the use of litigation funding was already well-established in the legal industry, its potential benefits may be even more attractive to litigants in the midst of the COVID-19 pandemic. The resulting economic turmoil has meant that attorneys and litigants may be even more eager to defray the costs and risks of litigation in pursuing claims. It is thus an opportune time to revisit the benefits of litigation funding and its current status in the legal industry.

Litigation funding can take on many forms, but it generally refers to an arrangement where a third party (such as a litigation funding company) pays a litigant’s attorney fees and other costs in exchange for a recovery based on the outcome of the lawsuit. The third party thus effectively invests in a lawsuit based on the perceived strength of the claims and potential recovery.  Litigation funding can provide access to justice for litigants that otherwise could not afford it, and can also help minimize the risks for litigants by sharing the costs and risks with a third party.

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