Commercial litigation funding has become popular within the legal finance industry. There are two variations of commercial litigation funding. The first is funding for the plainitiff & second is funding for the attorney. When a lawsuit funding company provides commercial litigation financing for a plaintiff they are providing funding as a pre settlement. In laymen terms this means before a case has reached a verdict. For instance if a company is in a copyright infringement case they may secure funding to help pay for fees directly or indirectly related to the legal battle. Some companies will secure funding to help pay for business expenses such as salaries & insurance benefits. Surely each company may secure funding for different reasons however the way you secure funding is consistantly the same.
No different than a company an individual who is in a dispute may also be eligible to secure commerical litigation financing. When an individual secures financing for a commercial dispute they too can use the money however they deem fit. Using the same scenario an individual may have put up tens of thousands of dollars copyrighting a product only to find out a company or another individual is producing the product without consent. The company may or may not have profit from the item regardless they are still committed copyright infringement which can adversely effect the plaintiffs ability to profit from his product.
Attorney’s can also apply for lawsuit loans for commercial litigation cases. When an attorney secures financing they oftentimes need the money to help pay for costs directly associated with the case. For instance if an attorney is fighting a copyright infringment case against a large manufacture chances are the company has hired a team of defense attorney to handle the case. Oftentimes these companies have deep pockets and willing to spend as much money litigating the case as necessary. For smaller law firms this could mean the difference of winning full compensation or going broke trying to litigate a multi-million dollar case.
Regardless of the scenario when someone decides to secure commercial litigation financing they will do so through a lawsuit funding company. Lawsuit funding is much different than a bank. A bank would never loan money against a pending lawsuit nor would they loan money on a contingency fee basis. For most pre settlement cases the loan comes as non recourse meaning you only pay back the lender if you win the case.