Third Party Litigation Funding

Need a Lawsuit Cash Advance? Here’s What You Need to Know About Third Party Funding

In the realm of legal battles, the need for immediate financial support can be critical. For many plaintiffs, a lawsuit cash advance is a lifeline, enabling them to pursue justice without the crippling worry of financial strain. One innovative solution gaining traction is third party litigation funding. This guide provides an in-depth look at what third party funding entails, its benefits, and the critical considerations you need to be aware of before proceeding.


Understanding Third Party Litigation Funding

Third party litigation funding refers to the financial support provided by an outside entity to a plaintiff involved in a lawsuit. These funders are not party to the case but provide the necessary funds to cover legal fees and other related expenses. In return, they receive a portion of the settlement or judgment if the case is won. This arrangement allows plaintiffs to pursue their cases without the burden of upfront legal costs.

How Does Third Party Funding Work?

The process of obtaining third party litigation funding typically involves the following steps:

  1. Application: The plaintiff submits an application to a litigation funding company, providing details about the case.
  2. Evaluation: The funding company evaluates the merits of the case, assessing the likelihood of a favorable outcome.
  3. Agreement: If the case is deemed viable, the plaintiff and the funder enter into an agreement outlining the terms of the funding.
  4. Funding: The plaintiff receives the agreed-upon funds to cover legal and other necessary expenses.
  5. Repayment: If the plaintiff wins the case or receives a settlement, the funder is repaid from the proceeds.

Who Benefits from Third Party Litigation Funding?

  • Plaintiffs: The primary beneficiaries are plaintiffs who might otherwise be unable to afford the costs associated with a prolonged legal battle.
  • Attorneys: Lawyers benefit as well, as they are assured of payment for their services.
  • Funders: Third party funders profit by taking on the risk in exchange for a percentage of the settlement.

Advantages of Third Party Litigation Funding

Third party litigation funding offers several significant advantages:

Access to Justice

One of the most profound benefits is the democratization of access to justice. Lawsuit cash advances enable individuals with meritorious claims but limited financial resources to pursue legal action. This funding levels the playing field, allowing plaintiffs to hire experienced attorneys and cover necessary litigation expenses.

Risk Mitigation

For plaintiffs, the financial risk associated with losing a case is mitigated. Since repayment is contingent upon a successful outcome, plaintiffs are not burdened with debt if their case is unsuccessful.

Strategic Advantage

Having adequate funding can also provide a strategic advantage. Plaintiffs are less likely to settle prematurely for a lower amount due to financial pressure. This can lead to higher settlements or judgments in favor of the plaintiff.

Non-Recourse Funding

Most third party litigation funding is non-recourse, meaning that if the plaintiff loses the case, they owe nothing to the funder. This feature makes it a less risky option compared to traditional loans.

Considerations and Risks

While third party litigation funding has numerous benefits, it’s essential to consider potential drawbacks and risks:


The cost of litigation funding can be high. Funders typically charge a significant percentage of the settlement, which can sometimes be more expensive than traditional loans. It’s crucial to understand the financial implications fully before agreeing to funding terms.

Control and Influence

In some cases, funders may want some control over the litigation strategy, which can lead to conflicts. Plaintiffs should ensure that the agreement clearly outlines the extent of the funder’s influence.

Confidentiality and Disclosure

The involvement of a third party funder may need to be disclosed in legal proceedings, depending on jurisdictional rules. This could potentially influence the dynamics of the case.

Ethical considerations also come into play. The relationship between the plaintiff, attorney, and funder must be managed carefully to avoid conflicts of interest and ensure that the plaintiff’s best interests are prioritized.

How to Choose a Third Party Litigation Funder

Selecting the right third party litigation funder is critical. Here are some factors to consider:

Reputation and Track Record

Research the funder’s reputation and track record. Look for reviews and testimonials from other plaintiffs who have used their services.


Choose a funder who is transparent about their terms and conditions. Ensure that you fully understand the cost structure and any potential hidden fees.


A good litigation funder should offer flexible terms that are tailored to your specific needs and circumstances. Avoid funders who offer a one-size-fits-all approach.

Ensure that the funder has experience with cases similar to yours. Their legal expertise can be invaluable in assessing the viability of your case and providing strategic insights.

The Future of Third Party Litigation Funding

The field of third party litigation funding is evolving rapidly. As more plaintiffs become aware of this option, the demand for lawsuit cash advances is likely to grow. Technological advancements and increased competition among funders are also expected to drive innovation and improve terms for plaintiffs.

Regulatory Developments

Regulation of third party litigation funding varies by jurisdiction. In some regions, there are calls for stricter regulations to protect plaintiffs from predatory practices. Staying informed about the legal landscape in your area is crucial.

The market for litigation funding is expanding globally. Emerging markets are seeing increased activity as legal systems evolve and plaintiffs seek new ways to fund their cases. This growth is expected to bring more options and potentially better terms for plaintiffs.


Third party litigation funding provides a vital solution for plaintiffs in need of financial support to pursue their legal claims. By understanding how it works, weighing the benefits against the risks, and choosing the right funder, plaintiffs can make informed decisions that enhance their chances of a successful outcome. As this industry continues to evolve, staying informed and vigilant will be key to leveraging these financial tools effectively.