HOW IT WORKS
What is Third Party Litigation Financing?
Third-party litigation is an arrangement where an independent third party finances some or all of the legal expenses of commercial legal disputes in exchange for a share of the proceeds recovered from the resolution of the dispute.Â
Here's an example
Background
The Road Company, which builds roads, has a contract worth Rs. 1000 Cr with the Govt entity to build a road. The company has delivered on the contract but the payment has not been made due to contractual disputes and bureaucratic delays.
The company enters into litigation to claim its dues. Here are 2 ways in which it could play out.
Without TPLF
With TPLF
Without TPLF | With TPLF |
The funds for litigation expenses need to be diverted from working capital | The firm's cash flows can now be put towards working capital instead of legal expenses. |
The company does not have a solid litigation strategy and may engage a legal firm that may not be suited to the specific type of litigation, impacting their chances of a positive outcome. | The TPLF partner outlines a litigation strategy based on its past experiences with such cases and engages a leading law firm. |
The Govt entity has much deeper pockets and if the case gets prolonged firm may either need to settle for a smaller amount or in the worst case the company may have to declare bankruptcy due to crippling legal costs. | With financial backing, a sound strategy and the top legal expertise, The Road Company is awarded the claim quickly. Part of the proceeds goes to the TPLF partner. |
Background
The Road Company, which builds roads, has a contract worth Rs. 1000 Cr with the Govt entity to build a road. The company has delivered on the contract but the payment has not been made due to contractual disputes and bureaucratic delays.
The company enters into litigation to claim its dues. Here are 2 ways in which it could play out.
Background
The Road Company, which builds roads, has a contract worth Rs. 1000 Cr with the Govt entity to build a road. The company has delivered on the contract but the payment has not been made due to contractual disputes and bureaucratic delays.
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The company enters into litigation to claim its dues. Here are 2 ways in which it could play out.
Scenario A – The Road Company decides to enter litigation on its own
Key considerations
The funds for litigation expenses need to be diverted from working capital.
The company does not have a solid litigation strategy and may engage a legal firm that may not be suited to the specific type of litigation, impacting their chances of a positive outcome.
The Govt entity has much deeper pockets and if the case gets prolonged firm may either need to settle for a smaller amount or in the worst case the company may have to declare bankruptcy due to crippling legal costs.
Scenario B – The Road Co engages a third party ligitation financier like LitiCap
Key considerations
The firm’s cash flows can now be put towards working capital instead of legal expenses.
The TPLF partner outlines a litigation strategy based on its past experiences with such cases and engages a leading law firm.
With financial backing, a sound strategy and the top legal expertise, The Road Company is awarded the claim quickly. Part of the proceeds goes to the TPLF partner.
All this while, The Road Company has deployed its own funds wisely towards working capital and has bagged a few other large contracts.
Litigation funding is common practice in the US, Singapore, Australia, UK and is now emerging in India. The global market for litigation funding is over USD 10bn and is expected to reach USD 22Bn by 2027.
Why opt for third party litigation funding?
01
Focus on what you do best
We understand the nuances of contractual claims litigation. By engaging a third party litigation fund like us, you can improve your cash flow management and focus your working capital, talent, and energy on what you do best – your core business.
02
Unlock liquidity and reduce risk
Our investment in your litigation is on a non-recourse basis – this means we only get paid if your claim is awarded. With our expertise, we help companies speedily navigate complex, lengthy cases for a positive, risk-free outcome.Â
03
Level the
playing field
Litigation is often won by the party with deeper pockets due to the high costs involved. We level the playing field for smaller players to access the best legal talent and litigate rightful claims against larger bodies.
LitiCap has extensive experience of dealing with dispute resolution in India from start to finish – we have a unique approach where we partner deeply with clients to work toward a favorable outcome.
