Common Myths and Misconceptions About Litigation Funding


Common Myths and Misconceptions About Litigation Funding

A lot of misleading information about litigation funding stops people from using this great resource. Here’s some accurate information on the subject.

Litigation funding can be a major resource for anyone taking on a lawsuit against someone with more money. Lack of funds to fight in court is a huge reason why many people don’t try for lawsuits, but litigation funding can prevent this. However, litigation funding an also be complex and confusing, so understanding the truth behind the common misconceptions and myths is important. 

Myth: I Must Repay the Money No Matter What
The first thing to understand is that most litigation funding is nonrecourse. This means you don’t need to pay back the funding unless you win your case and receive a settlement. This takes much of the financial pressure off, and it means that litigation funding is quite safe from a financial standpoint. 

Misconception: I Can Only Use the Money for Court Fees
A lot of people think they can only use the funding to pay off court fees and the like, but you can use it to pay for a variety of other things, such as business expenses, during this time. However, there are still limitations on what you can spend the money on, which is one thing you should consider before applying for litigation funding.

Myth: Litigation Funding Negates Attorney-Client Privilege
The laws regarding client-attorney privilege can be complicated, but your attorney and the litigation financing company should know their way around these laws, so no one will compromise your rights. It’s possible that your attorney may need to share some of your information with the company, but they’ll keep it to a minimum. You can also often see exactly what information will be shared by checking the contract before you sign it. This is the truth behind the many misconceptions that surround litigation financing. Before you sign any paperwork to commit to litigation funding, make sure to check every part of the contract so that you know you’re receiving the proper protections.

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