5 Reasons why a Flexible Litigation Funder is Better than a Traditional Funder
Litigation funding has become more mainstream in the legal world..
Over the last few decades, litigation funding has grown significantly as more claimants seek finance for their cases. It can also be seen as a response to the increasing cost of litigation. This trend has been widely adopted in countries such as the UK, Australia, and the U.S. But as more players take up this option, today's litigation funders such as Axiafunder have become more flexible than the traditional ones. Let's examine the reasons why. But first, what is litigation funding?
What is Litigation Funding?
Also known as litigation finance, this describes funding the cost of a litigation case by a third party in return for a portion of the proceeds when the plaintiff wins or settles. The funder can pay the lawyer fees or offer other costs of the case. The legal claim is treated as a financial asset with a return profile and risk.
Why Do People Need Litigation Funding
Clients from a variety of backgrounds will seek litigation funding for several reasons. Here are some of the primary (most common) ones:
- Lack of Cash- Litigation cases tend to be expensive. If it's a high-stakes case or the defendant has the finances, the costs could become overwhelming. Individuals and businesses that can't cater for these legal fees turn to the funder to help them with resources to seek legal redress.
- Time- Some litigation cases can take years. Whether you are a business or an individual, this can be very expensive. The litigation funder provides money throughout this period so that the plaintiff can get their claims at the end of a lengthy litigation case.
- Business Protection- A business will seek resources from a litigation funder if they don't want to use the company funds on the case. If a firm has capital-intensive projects that require a lot of cash, they would prefer to use their money and profits for business investment and outsource some cash for the legal case.
- Lawyer Preference-With cash from a litigation funder, you can hire your preferred counsel without looking for extra money. This allows you to enlist the best lawyer that can handle your case without worrying about finances.
5 Reasons why Axiafunder is More Flexible than Traditional Litigation Funders
Traditional litigation funders only catered for the legal or counsel fees. However, some platforms are providing more flexible options for claimants and lawyers. This online litigation funder doesn’t limit their services to only legal costs. Here are some of the reasons why they are flexible:
1. They Fund and Select a Wide Variety of Cases
Unlike traditional litigation funders, platforms like Axiafunder are very flexible in case selection. They fund smaller cases that are otherwise considered too insignificant because they don't meet the size threshold. They can also fund high-risk claims during case selection as long as the pricing is suitable for the investors. They go beyond and fund cases in different jurisdictions and other countries, especially since the litigation funding market is underdeveloped in most developing nations. In addition, they'll also take cases that take 5-7 years to resolve if it is worth the investment.
They also have a structure that allows them to fund multiple claims simultaneously. This type of funding is convenient if the financing is for different cases that the same lawyer or law firm is handling. With this kind of flexibility, Axiafunder can cater to more claimants.
2. They Diversify How Cash is Used
Traditional litigation funders restrict the financing to cover legal costs only. However, with tools like Axiafunder, the money can be offered as working capital for the business to stay afloat, especially in lengthy litigation processes. The company can also divert the funds to claim management companies who finance the book building of claims. In addition, they also enable claimants to get refunds of previously incurred expenses during the start of the litigation process, such as valuation reports. This way, the claimant can choose the area they need help with the most to ensure there are no cash problems
3. They Help in Sourcing After-the-Event (ATE) Insurance
Axiafunder-type litigation funders are known for connecting investors with vetted commercial litigation investment opportunities. On top of that, they also help clients source for after-the-event insurance. In a litigation case, the loser is liable for the costs of the other party. This insurance is purchased to mitigate this type of risk.
4. They Have a Quick Application Process
Axiafunder has a streamlined application and turnaround process that typically funds within four weeks, 2-3 times faster than other litigation funders. If you have a case that needs attention, you can fill in your details on the website. They require a name, email address, contact number, and a short description of the case. During this period, the team will analyze your case to ensure that they can keep all costs at a minimum and increase the margins based on their investors. Once the case is approved, they let the clients know at the earliest opportunity.
5. They Don’t Have Funding Limitations
Compared to traditional litigation funders, Axiafunder and similar entities don't have any investment pressure from external investors, especially regarding the cases they pick. Traditional litigation funders are backed mainly by institutional investors who inject a lot of cash into the cases. Therefore, because of this fund size, the firm has to focus on big legal matters. Because of this, they can fund legal cases that need less than £1 million without any problems.
Summary
Litigation funders are essential in today’s legal world. They help claimants with resources to take on cases in return for some portion of the wins. However, not every individual or business requires legal fees only. There are other financial needs that these funds can cater to as the litigation cases go on. A flexible alternative such as Axiafunder offers more benefits to claimants. It also makes it easy to focus on their other businesses without worrying about the size of their case or insurance.
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Diana Nadim
Diana Nadim is a guest writer for Millennial Moderator.
