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3 Recommendations For Cos. Considering Litigation Finance

Erika Levin
Law360
April 28, 2020

In a rather short period of time, the novel coronavirus has had an extraordinary impact on the lives of millions of people around the world. The business community is no exception.

Businesses are closed, supply chains are disrupted, workers are being furloughed or laid off, and no one is quite sure when things will return to some semblance of normal. As we brace for the continued global economic consequences of the pandemic, it is important to think proactively, mitigate risk, and take advantage of the resources that are available to assist.

In the weeks and months ahead, businesses will continue to face a variety of challenges as a result of the pandemic. With constrained budgets and mounting economic pressures, many will be forced to make difficult decisions about how to spend their precious resources.

While no panacea exists for the coronavirus-related constraints imposed upon businesses, litigation finance certainly offers a considerable benefit in that it allows businesses to allocate their resources to address core business needs and utilize money from the funder to pursue their meritorious claims. By using litigation finance to assist with the monetization of their legal claims, businesses can minimize their legal risk and generate cash flow.

While no one knows exactly what lies ahead, it seems safe to assume that as disputes increase and businesses tighten their spending, the demand for litigation finance will grow. Litigation finance is a valuable tool that businesses should strongly consider adding to their arsenal as they weather the economic storm caused by COVID-19.

What remains to be seen is how the pandemic will affect the availability and deployment of capital in this space. Will we see a continued expansion of the litigation financing market? Will additional money be deployed? Will the investment parameters change? Will the cost calculus for litigation finance capital change? Will the time frame from initial inquiry to the closing of a litigation funding agreement vary?

For businesses that are considering the use of litigation finance to assist them in monetizing their legal claims during this time, here are three recommendations to bear in mind.

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