Our process

Application

Apply via our website by providing all relevant information. We conduct a quick assessment of your request to determine if your claim is likely to receive funding. After a positive review we produce an investment memorandum ("memo"). It is a document that presents the claim in a way tailored to each funder, based on the information they typically need.


Market inquiry

We select funders who have investment profiles that are met by your claim. The criteria we check include: types of cases they invest in, legal areas, min/max claim values, litigation stage. We then provide the selected funders with the memo and gauge their interest in investing. The memo contains anonymized data, i.e. the identity of the parties is not being revealed at this point.


Dialogue

From this point on, we engage in further discussions with the interested funders, having non-disclosure agreements (NDA) in place to ensure confidentiality. During this phase we might ask you or your lawyer to provide some case documents. The goal is to let the funders understand the claim so that they can determine if they are interested in the investment and, if so, put a price on it (produce a term sheet).


Selection

Having obtained term sheets with general economic terms and pricing from the investors, we review these and present them to you with our guidelines to help you decide. You select a single funder (rarely more, as they typically require exclusivity) whose initial terms suit you best. This step usually ends 7 days after you submitted your application on our website.


Offer

During several weeks (usually 4, but sometimes even up to 10) the chosen funder(s) conducts a thorough due diligence of your case. This process allows them to verify the merits of the claim and if their hypothesis about the claim is supported by the facts and evidence. In case of a positive review, you'll be presented with a detailed funding agreement. If you accept, the contract is executed and your company receives the funds.

Frequently Asked Questions

What is litigation funding?

Litigation funding is an arrangement where a third party covers the costs of litigating or arbitrating a legal claim, in case the claimholder can not afford it or does not want to pay. In exchange, the funder is entitled to a share of the proceeds from the claim (either by settlement or court award). Learn more about litigation finance

What types of cases can Litwyn help with?

Litwyn provides support to claimholders in meritorious commercial cases that require litigation, arbitration or insolvency proceedings at any procedural stage. These are generally disputes where an organization, entrepreneur or investor seeks damages because of the wrongful conduct of another party. When referring your case to funders, we take into account their specializations, which typically include, but are not limited to:

  • Breach of contract,
  • Breach of fiduciary duty,
  • Wrongful termination,
  • Trademark or patent infringement,
  • Professional Negligence,
  • Business tort,
  • Trade secrets,
  • Domestic or international arbitration,
  • Antitrust practices,
  • Securities and shareholder lawsuits,
  • Investment treaty claims involving businesses and public offices,
  • Fraud,
  • Insolvency.

Although we try to focus on commercial cases, if you have a personal claim (e.g. personal injury, medical negligence or divorce) that needs financing, we can transfer your funding request to the right places.

What is the minimum claim value?

It is essential for your claim's pursuit to be financially viable. Litwyn does not have a minimum case size but, on individual cases, will facilitate funding for cases valued at least from £100,000 in the UK and from $4 million in the US. This is the minimum amount of your expected judgment or settlement; and as for the upper limit, in theory, there is none. What is important is that the claim's value must greatly exceed the amount of funding you seek, typically by 6 to 10 times. This means that in a case of $10 million in value your funding request should be no more than approximately $1.6 million.

What are the advantages of litigation funding?

There are four common situations when litigation funding can benefit you:

  1. Your company lacks the financial resources to cover the costs of expensive litigation or arbitration. In such a case, litigation funding allows paying the legal fees of your preferred lawyer and other litigation expenses. This prevents you from foregoing a meritorious claim simply due to the cost of pursuing it or from settling the claim for a lower amount than possible because of the intimidation of a deep-pocketed opponent.
  2. Despite your company being able to finance the pursuit of a claim on its own, the financial officer will, nevertheless, likely prefer to minimize (a sometimes unpredictable) legal spending. While litigation expenses lower a company’s EBITDA, any damages recovered years later constitute a non-recurring item that is removed from EBITDA. Therefore, litigation funding prevents the negative impact that lawsuits have on financial statements.
  3. Litigation funding can also provide your company with additional capital (backed by the legal claim) that can be reinvested into the company’s core business, e.g. for operating expenses, such as product development, manufacturing or payroll. Thus, it can serve as fuel for company growth.
  4. Finally, in some contexts, ongoing litigation can be taking too long for the company to endure or its outcome has become less certain. In such cases, litigation funding provides incentives to continue legal action.
Why work with Litwyn?

There are hundreds of litigation funding companies worldwide, with at least 40 funders investing in commercial cases in the United States alone. Furthermore, the industry is growing rapidly as it also experiences new market entrances by outside organizations such as hedge funds, private equity funds, banks and family offices. And in the current market conditions it is often the case that niche, under-the-radar funders may offer better terms than the ones that appear on the first page of Google search results.

In a crowded marketplace like this Litwyn brings clarity when you are wondering who to trust and how you should proceed in your search of litigation funding. We match your particular case with the right funders, who differ based on various aspects like types of claims they invest in, typical investment amounts, underwriting process, track record, source of capital, etc.

We provide support at every step of the funding process – from the case request to the funding agreement. We are also happy to help you learn more about the litigation funding industry. All this in an effort to procure the best economic terms for your claim from a reputable funder and for you to be able to make the most informed decision as possible.

Lastly, funders face increasing demand for their services. So unless you have past experience with any of them, you might find it difficult to attract them to your case without outside help from a professional partner.

What can the funding money be used for?

The cash advances obtained through litigation finance can be used for various expenses besides mere lawyer’s fees. They can include other ongoing litigation costs like experts, court reporters, videographers and investigators, as well as different corporate financial needs such as debt, operating expenses, etc. Your funder may also agree to pay past costs, provided that they stay within the agreed funding budget.

Is funding available in my country?

Litwyn is active in multiple jurisdictions across the world. While we are able to help you with finding an investor in any jurisdiction where funding is legally possible, we usually work in countries where litigation funding is a well-developed market. These are the locations where the crowded competitive landscape allows us to facilitate funding for a wider variety of claims, and at terms that are much more attractive to our clients.

Do I need a lawyer?

Yes, unless you have a perfectly good reason not to hire one. Litigation funders need to know who your selected counsel is and what their commitment to the case is because those are things taken into consideration during the evaluation of your case. That is why you should at least have talked to a lawyer who is willing to take your case on the condition that you enter into a litigation financing arrangement.

The good news is that we welcome funding requests from both plaintiffs and lawyers, so if you prefer your counsel to handle this process for you, feel free to ask them to seek out funding in your name.

At what litigation stage can I seek funding?

Litigation funding can be provided at every stage of the litigation cycle. While it happens usually before filing the lawsuit, it is also possible afterward: waiting for trial, during litigation (in case of an unexpected budget increase), after judgment or settlement (to enforce its execution) or when an appeal is pending.

How will my claim be evaluated?

There are a couple of criteria that funders look at when assessing your case.

First of all, they consider if your claim has strong merits. They look for anything that might support the case narrative and damages, such as documentary evidence, strong witnesses, and favorable discovery. Based on that they estimate a probability of the case’s success. Your lawyer must also have a credible litigation strategy. Funders analyze information that is public record or will be produced in discovery, but also information that is protected by the work product doctrine (e.g. your lawyer's experience and expertise, the budget of your case, etc.) – of course, everything under confidentiality agreements. At the end of the day, your claim must have at least a 60%-70% success probability.

Funders also need to understand if their investment makes sense from the return on capital point of view. The likely duration of the litigation process is factored in (given the time value of money) but also the damages to investment ratio. It is important to note that funders aim for the anticipated judgment to be satisfactory not only to themselves but also to the claimant and the law firm - most funders prefer when the claimant receives at least half of the awarded judgment.

In order to collect damages from the defendant, the latter has to be solvent, obviously. So, the existence of sufficient assets in the defendant’s possession is crucial, otherwise, winning a case will not matter much.

Funders conduct diligence of your case using their in-house teams of experienced trial lawyers. If the analysts are in favor, usually the last step involves an internal investment committee approving your funding request.

What are the typical terms of a funding deal?

Usually, funders are quite flexible when it comes to structuring their funding deals. Depending on what you need and on the funder’s own expectations the terms can be tailored in a number of different ways. Your funder can ask for a return on invested capital plus a percentage of your claim’s proceeds which will vary depending on some of the criteria analyzed during case evaluation. Sometimes, a share of the claim’s recovery might not make sense, and the funder will opt for a return of a fixed amount.

For example, you might receive an offer from a funder proposing to pay 50% of your legal fees in exchange for 20% of any recovery, provided that your lawyer agrees to defer the other half of their fees in exchange for another 20% interest of the recovery. This would leave you with 60% of the expected recovery and having to pay only for the expenses not covered by funding. However, you might decide that you do not want to incur any out of pocket costs or your law firm might need a higher upfront coverage of its fees – both are possible scenarios that would impact the final structure of your deal.

Finally, some of the standard provisions included in a typical litigation funding agreement are the allocation of funds, definition of proceeds, waterfall provision (determining the distribution of proceeds), right to early repayment, ethical considerations and so-called “bad boy” guarantees (discouraging bad conduct that would harm the funder’s position).

How much does litigation funding cost?

Remember that our services are free for you and the only costs involved are between you and your funder, as explained below.

First and foremost, litigation funding is based on a ‘no win – no fee’ rule which means that if a claim is unsuccessful, you owe nothing (a.k.a. ‘non-recourse financing’). It is normal for funders to see some claims fail and they simply accept it as an investment risk.

The only situation when litigation funding represents a cost to you is in the event of the successful outcome of your claim. However, even then, your repayment is limited only to the value of the proceeds. In other words, you would never pay more than what you win from the case.

Every funding agreement gives the funder the right to be repaid the investment capital plus a portion of the claim’s payout. The portion can be defined as either a percentage share of the amount recovered (after costs) or as a multiple of the invested amount. The higher the risk associated with your case, the bigger that portion is going to be.

For example, if $2 million is financed to pursue a case with an expected value of $20 million, then in the case of an agreed percentage share of 30% the funder receives $6 million of the proceeds (30% of the expected $20 million). The same amount would need to be repaid if the terms would involve a multiple of 3x (three times the $2 million invested), instead of a percentage of the recovery.

Even though the market is changing dynamically with prices rapidly dropping, litigation funding is still expensive. The reason is that funders must be able to offset their losses on unsuccessful cases with profits on successful ones. Thus, the expected financial returns for funders are more consistent with private equity and venture capital funds, rather than commercial banks. We have seen 15% - 60% shares and multiples in the range of 1.5x – 6x.

So what can you do to reduce the cost of your funding? Apart from presenting your case in a manner that helps to realize the high probability of winning, there are two ways of lowering the price. Firstly, you can seek funding from multiple respectable funders at the same time and leverage the competitive pressures to obtain better rates. This is what we help you with here at Litwyn. Secondly, instead of submitting a single claim, you can add additional ones and package them into a ‘portfolio’ of cases. Portfolio financing is much more attractive for funders, as it allows to distribute the risk of losing one case across the rest of the cases in the portfolio and, thus, reduce the price of funding.

Is litigation funding ethical?

There are several essential ethical considerations related to litigation funding and we help you navigate them.

Above everything else, litigation finance should ensure the complete control of the case by the plaintiff and any funding agreement should include a provision regarding settlement decisions.

Secondly, as funders must play the role of passive investors, they are required to respect the attorney-client relationship and recognize that lawyers always act in the interest of their clients.

Also, the disclosure of the use of litigation finance is a widely debated matter. Currently, there is no universal legislation imposing such requirements. However, as this is an issue that might be someday regulated, it is important to follow the news related to it.

Another issue relates to the law on champerty and maintenance. Today, both doctrines are generally recognized as obsolete, giving leeway to litigation finance activities. However, outside of major centers of commercial litigation, there are still a few jurisdictions where champerty and maintenance have not been completely abolished, and where these concerns need to be addressed.

Will I lose control of my case?

Neither the funder, much less Litwyn, does not influence your litigation and does not decide when you should settle your case. You keep all the rights to manage your litigation. Think of it as leasing a car – even though the vehicle is financed by a third party, it is still you who decides how to drive it.

This question, however, is important because there are some providers with a bad reputation on the market who offer financing terms that involve the transfer of control over the case. When you work with us you can be sure you will not enter into obscure agreements with any such company.

Will this affect my attorney-client relationship?

Receiving litigation funding does not in any way change attorney-client relationships or affect the work product. Court decisions consistently permit litigation funders to access work product without waiving the work product protection.

What about confidentiality?

As long as you have a non-disclosure agreement (NDA) in place with everyone with whom you speak about the case (prospective funders and related third parties, e.g. a broker), confidentiality is ensured. Provided that the NDA is executed before passing the information on to a litigation funder, that information should remain protected by the work product doctrine and not be discoverable by the opposing party.

However, your NDA should include a so-called “common interest provision”. Many court rulings recognized the protection of the communications with those who assist the funding process under the work-product doctrine. Including an explicit common interest provision in the NDA broadens the work-product rule by providing additional protections. In practice, when using our services, both Litwyn and your funder are considered as part of your litigation team and treated with the same protection of confidentiality as expert witnesses.

Finally, litigation funders with a good reputation do not require you to disclose information that is confidential exclusively under the attorney-client privilege (which affords narrower protection than the work-product doctrine), as this could result in a waiver of the privilege.

Is litigation funding useful only when in a financial struggle?

Commercial litigation funding can be referred to as ‘corporate finance for law’, as it is a universal tool that helps CFOs utilize valuable legal assets and monetize legal receivables according to the company’s timeframe, not court calendars. It allows preserving cash for investing in company growth and other ways that are more efficient than litigation.

Litigation is not the core business activity of almost all businesses, so it makes sense for them to use their resources on what they are already good at instead of engaging in litigation investments with unknown outcomes.

Despite having sufficient capital, companies opting for litigation finance have a way to hedge risk exposure, e.g. by financing enforcement of unpaid judgment debts. Finally, companies achieve reporting and accounting benefits with litigation funding, like limiting the impact of legal costs on the financial statements.

Can a law firm receive litigation funding?

Besides traditional plaintiff funding, litigation finance has during recent years evolved towards services targeted at law firms as well. Law firm financing is focused on de-risking of contingency fees and on the acceleration of legal fees.

Litigation funding allows a lawyer to take a case on contingency – a benefit they can add to their answer to a client’s request for proposal. Funding also helps improve their firm’s cash flow when they have cases on contingency that have been running for years and are yet to reach a successful outcome.

Rather than funding a single case, these agreements are increasingly structured as financings of a law firm’s selection of cases. In what is known as ‘portfolio funding’ the funder provides a law firm with capital collateralized by at least three of the firm’s contingent fee cases, with the non-recourse attributes in place. This permits lawyers to offload cases that would otherwise be too costly or too demanding to pursue. If one case is lost, the funder’s investment is recouped from the next (successful) case.

This type of arrangement does not go against codes of professional ethics (such as ABA’s Model Rules of Professional Conduct, Rule 5.4) prohibiting sharing fees with nonlawyers, because it does not involve the funder taking a percentage of the law firm’s contingency fee – in fact, it is analogous to a bank line of credit secured by contingent recoveries.

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