3 Ways Corporate Legal Departments Can Use Litigation Finance
A corporate legal department is often under great pressure to protect a company and ensure its survival. Nonetheless, internal pressures to control legal costs and leverage external litigation resources often prevail. Litigation is costly. There’s no way around it. But litigation finance is useful in many ways and can provide the resources your corporate legal department needs to get the job done.
For corporate legal departments, litigation finance can be used to:
- Offset Risk
Companies often avoid lawsuits due to the associated costs. But avoiding litigation can lead to unfavorable legal outcomes and additional financial hardship. Litigation finance reduces the risk of filing a lawsuit and of dealing with financial difficulties from outside sources. Non-recourse legal funding can even supplement an organization’s working capital.
In fact, litigation finance can convert cost to profit. Whether an organization is dealing with IP theft, business torts, or an antitrust matter, it must assess the value of the claim versus the cost of pursuing legal action. In-house counsel may, therefore, choose not to litigate. However, the option to share the risk with a lawsuit funding company increases the odds of a successful outcome and allows a company to potentially profit from the agreement.
- Manage Balance Sheets
When considering the potential for profit, litigation financing can be used for balance sheet management. Litigation costs are significant expenses and are recorded as such in the books. The impact of the lawsuit can offset the benefits of any recoveries obtained from it. In many cases, recoveries don’t increase corporate earnings.
With legal funding, a corporate legal department can find hidden value in legal matters. All the while, litigation financing avoids negative financial impacts on the company’s bottom line. Otherwise, the cost of litigation can have more of a negative impact than the harm suffered leading to legal action. After all, it’s often hard to establish the impact of losses brought on by another party.
Thus, another benefit of working with a funding company is that it can help assess the potential value of a claim. Therefore, your claims can be turned into assets, which can be used as collateral in developing a case.
- Improve Litigation Outcomes
Lawsuit financing provides a legal department with the resources to hire outside counsel, industry experts, and other professionals to strengthen a case. The ability to deploy more resources can ultimately optimize litigation outcomes. Your team can pay the fees needed to afford top-quality legal counsel, so the investment pays off. In the meantime, corporate decision makers can spend more time assessing whether pursuing litigation is worth it, all the while seeking the counsel they need to make the most informed and lowest-risk decisions possible
In general, the more professional and experienced a litigation team is, the more likely it is to reach a favorable outcome. A litigation finance company can also help assess the merits and risks of a claim. It can assist in budgeting for litigation expenditures too. Lawsuit funding companies generally gravitate toward cases they know have a better chance of winning, based on extensive experience in the legal industry and knowledge of many types of cases.
Find Financial Relief with FCA Legal Funding
We offer pre- and post-settlement funding in Southern California plus other litigation finance programs. You can receive non-recourse legal funding by applying online in minutes. You only pay us back if your case wins, and there are no upfront payments or anything paid out of pocket. To get started, apply online or call 310-424-5176 today!