Paving the path to justice: litigation funding for business owners
Litigation can often be a conundrum for business owners. You want to access justice from the defendant, but legal claims are expensive and carry a minimum 35% risk of failure. So how can you fight for your claim while minimising the impact on your business?
This is where legal angel investment comes in. In this blog, we’ll explain how litigation funding works for business owners – first setting out the challenges you currently face and how these can be solved to pave the way to justice.
What kind of challenges do business owners face from litigation?
For a business owner, taking on a litigation claim comes with major challenges which affect many aspects of the business. There are four main concerns which convince our clients to work with us – financial, managerial, emotional and time constraints.
Financial challenges come from the fact that any business owner funding a claim is responsible for their own costs, as well as those of the other side if the claim is unsuccessful. This creates risk within the business due to the chance of failure. Many business owners are also claiming against much larger corporations with deeper pockets and better resources.
When taking on a large company you need to punch above your weight somewhat, meaning costs can easily pile up. Money spent on litigation could and should be invested elsewhere in the business – hampering productivity and growth.
Management concerns stem from the need to coordinate a legal team at the same time as running your business and managing your team as normal. This creates a huge burden for the business owner, and senior colleagues too, often making most litigation claims unsustainable. In some cases, business owners feel it is easier to abandon litigation and focus on running their business instead.
Let’s not forget emotional burdens too – taking a claim to litigation is a huge undertaking and is fraught with stress. Very often the investment decision is clouded by emotional reaction (an attitude of “I am right, they are wrong”) which makes it harder to proceed in the correct way. Outside of the company, a litigation claim can affect a business owner and their family, as well as staff and investors.
Litigation claims take time, especially if you want to be successful. A claim could take up to 3 years to come to trial, with costs piling each month – and at the end, you could be liable for the defendant’s costs. Time is also needed to manage all the administrative aspects of the claim – managing your legal team, gathering documents and data and responding to queries. You need to do all of this and run your business too.
What opportunities does legal angel investment offer a business owner?
The first and most important advantage of legal angel investment is that it removes the financial burden. We fund your costs as a business owner undertaking litigation and indemnify you for the other side’s costs if the claim is lost. We also pay bills promptly and without fuss, as any good legal angel investor should, so you can keep control of your costs.
The due diligence we undertake before accepting a claim is a very important part of securing legal angel investment. We carefully review your claim and monitor it as it evolves, so we confidently say that a claim is meritorious or advise you that it is not and therefore should not be pursued. Due diligence allows us to confidently say, on balance, that investment in your claim is likely to create a successful outcome.
Legal angel investors are also a valuable sounding board during litigation. You may have managed the claim with your legal team for some time, existing in a bubble, but we can add valuable third-party insight to provide perspective. We don’t manage the claim for you but are on-hand to offer expert advice based on our experience.
Removing financial burdens and allowing you to tap into expert advice when needed also helps you concentrate on managing your business day to day, and reduces the emotional burden on you, your staff and your family.
What is significant about legal angel investment is how it changes the attitude of the defendant. Once the claim is backed by investment the other side takes you, as the claimant, more seriously. The message is loud and clear – this claim is good enough for a professional funder to invest in it, and that you will not run out of money!
Case study: the value of litigation funding for businesses
Watch our client, an entrepreneur and business owner, talk about how his claim was transformed once we invested, and how we helped him win his case:
Many business owners are waking up to the advantages of litigation funding to support them through a difficult time, and to provide a positive outcome. Often the defendant does not want the case to be brought to a judge once legal angel investment is secured, so many business owners find that settlement is arranged more quickly. From our experience, no business should be investing in litigation if it can partner with a third party, like us, to pay costs and underwrite risks.
Legal angel investment is common sense. Financial burdens are removed which allow you to access justice properly, without impacting the daily running of your business.