Integrating Litigation Funding into Your Next Client Pitch
In recent years, the legal industry has seen a dramatic increase in demand for alternative fee arrangements (AFAs). The 2016 Canadian Lawyer Corporate Counsel survey found that 78% of respondents are interested in engaging their law firms in AFAs, although law firms are only suggesting them 8% of the time.
Law firms therefore face the challenge of proposing unique arrangements in order to win new business. By integrating litigation funding into a client pitch, counsel can offer an AFA that demonstrates a true understanding of the risks and costs of litigation. Litigation funding gives clients greater fiscal flexibility, while helping them - and their firms - protect their bottom lines. Proposing it as a means for financing a case helps lawyers show consideration for a client’s internal business operations and an interest in helping them succeed while also meeting budget expectations.
Most litigation ends up on a corporate balance sheet as a major expense and can be seen by management as a potentially risky drag on EBITDA and earnings. Litigation funding can clear a path for in-house counsel to pursue litigation without negatively affecting the bottom line or corporate earnings. A funder’s involvement can reduce the company’s litigation outlay and, because the funder covers most or all of the expense, the litigation costs can be removed from the expense line on a profit-and-loss statement.
As an objective outsider, a litigation funder also provides an additional level of scrutiny into a claim, giving the company greater confidence that the litigation effort is worth the risk. Funders closely analyze cases, and while they cannot ensure that a claim will be successful, they invest only in those cases that they strongly believe will succeed.
By incorporating litigation funding into a pitch or RFP to a new or existing client, a law firm therefore offers an innovative arrangement without reducing its own bottom line.
To learn about the ways litigation funding can be used to help your firm provide alternative fee options, contact us for more information.