Lawsuits, especially class action lawsuits, are incredibly expensive and can take years to resolve. Litigants and their attorneys conduct a cost-benefit analysis to determine if the litigation is worth the time, effort, and money - even if the case has merit. Keep in mind, many of these cases are against some of the largest corporations in the world who may have a “war chest” and can litigate your average law firm into the ground. Que litigation financiers.
Litigation financing helps litigants, usually plaintiffs (the party suing) and law firms offset the cost of litigation by injecting capital to assist with litigation costs. Ultimately, litigation financing arms plaintiffs and their attorneys with the necessary capital to go “all the way” and see their day in court.
In return for the capital infusion, in the event there is an award or settlement, Litigation Finance companies receive a multiple on their investment due to the high-risk, and unpredictable nature of litigation. Companies that engage in litigation financing typically diversify and reduce risk by investing in a bundle of litigations, rather than a single case.