Litigation funding, also known as legal financing and third-party litigation funding (TPLF), can provide a party who otherwise lacks the necessary resources the funds needed to litigate or arbitrate a claim, or potentially to obtain funds to be repaid from any eventual recovery. A funder may obtain a share of the proceeds of the claim if it results in a favorable judgment or settlement, and in some cases the funder has no recourse to recover funds beyond the value of that recovery.
Litigation funding has two major divisions: consumer financing, commonly referred to as pre-settlement funding or plaintiff advances, and commercial financing. Consumer financing generally consists of small advances between $500 and $2000. Prominent consumer financing companies include LawCash, Oasis Financial, and RD Legal Funding. Commercial financing for companies to pursue legal claims generally is dedicated towards payment of attorney fees and litigation costs.
Litigation funding may also come in the form of crowdfunding, in which case hundreds or tens of thousands of individuals can help to pay for a legal dispute, either investing in a case in return for part of a contingent fee, or offering donations to support a legal right that they believe in.
Third Party Litigation Funding has been analysed and formalised in order to compute the minimum value of a claim suitable for the funding agreement.
Litigation funding has been permitted in England and Wales since 1967. Commercial litigation funding has been allowed in Australia in the late 1990s. Forms of litigation funding have since been authorized in other nations, including the US, Canada and Asia.
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