Did you know that in 2021, the litigation cost of the Australian legal market was around A$4.8 billion?
It’s no surprise that litigation can be costly. It’s also understandable when an organisation or individual doesn’t want to spend their hard-earned money on court and lawyer fees.
And this is where litigation funding in Australia comes into play. This funding option allows you to share the risk of litigation investment with a funder.
Now, you may wonder how litigation funding works. Should you consider it?
Continue reading to find your answers!
How Litigation Funding Works In Australia?
Litigation funding or legal financing can cover all or some of your legal costs when you want to share the investment risk or lack cash flow. You can get litigation funding in Australia in several ways, the most common one being through litigation funding businesses.
These businesses essentially identify and provide capital for legal claims. Depending on the funder you choose, you can create an agreement for them to cover the cost of legal representation fees, court fees and other litigation-related expenses. On top of that, if you lose the claim, the funder can cover the cost of the other party’s legal claim.
In exchange, the funder will receive a percentage of what you receive after winning the claim or the damages awarded to you. This percentage will be in your contract with the funder. The amount can depend on the invested capital, the nature of the dispute and the timing of the resolution.
You can apply for litigation funding in Australia at any moment of the litigation process. It’s possible to directly apply for funding to a funding business or get your lawyer to set you up with a funder.
Why You May Consider Litigation Funding For Your Dispute?
Even after having sufficient cash flow, many choose litigation funding in Australia for multiple reasons. These reasons or benefits include:
Realising the value of your claim: Most businesses don’t pursue legal claims because of the resource risks. The costs of legal fees, cash flow, losing the claim, paying the other party and other expenses can quickly add up and become a burden on you. However, if you approach the claim as an asset and think of ways of leveraging this asset, litigation funding can be a great help to you.
Reducing financial risk: When you source litigation funding in Australia from a third-party provider, you transfer the risk of claim onto their hands. If the claim fails, the funder will not recover their funds. They will simply write off their investment. Plus, you have the flexibility to choose what portions of the claim you want the funders to cover. This way, you can lower the percentage of potential losses.
Balancing the scale between parties: If you dispute with a larger party with more cash flow, you can consider getting litigation funding to create a balance. You can contact the funders to cover your security for costs and other expenses.
A way to test the strength of your claim: Litigation funders perform critical due diligence before funding a case. They carefully assess the dispute, the potential costs, legal merit and chances of success before investing. For you, it can act as a quality filter. You can use their report to determine the strength of your case.
Bottom Line
Litigation funding in Australia is a reliable and straightforward way to get resources and reduce the risk of litigation expenses. However, to enjoy its benefits, you must find a trusted and experienced funder with the skills to assess your case.
Author Bio- The Author is a former litigator and litigation funding consultant. He helps individuals and organisations learn all about litigation funding in Australia.