In the fast-paced and often litigious world of modern business, corporations and legal departments face the challenge of balancing legal responsibilities with costs. Legal disputes, whether arising from contract breaches, regulatory compliance issues, intellectual property conflicts, or other sources, can exert significant financial strain on a company. This is where legal finance, an increasingly prominent financial tool, can prove valuable to both businesses and their in-house legal teams.

Legal finance is a strategic resource that provides financial support to companies involved in legal proceedings, helping them navigate complex litigation while preserving their financial stability. At Annecto Legal, we can assist businesses by helping to secure litigation finance for any legal disputes that may arise.

What is legal finance?

Legal finance, also known as commercial litigation finance or non-recourse third-party litigation funding, is a practice where a third party provides capital to businesses involved in legal disputes in exchange for a portion of the potential financial recovery from the case. This form of financing is often used to support the costs associated with legal proceedings. Financing can also be used across portfolios of cases, or to defer the costs of defending claims. Some businesses use external financing to flatten expenditure and make budgets go further. There are a wide range of options available to corporates.

Litigation finance can improve access to justice by allowing businesses with strong legal claims to pursue their cases without being constrained by limited financial resources. This type of funding is used in a variety of legal contexts, including commercial disputes, intellectual property litigation, class-action lawsuits, and more.

Capital is typically non-recourse, meaning that it is not considered as debt. This implies that the investment and returns are contingent upon the successful resolution of the venture, shifting costs and risks off balance sheet for the duration of a legal battle.

Who can benefit from legal finance?

Businesses

Companies from small start-ups to large businesses can use legal finance to:

• Finance legal actions and the retrieval of assets from litigation and arbitration.
• Remove the potential for losses and secure assured minimum gains.
• Speed up expected entitlements to release cash flows from pending claims and awards.
• Recognise opportunity and establish preferences for managing portfolios related to commercial litigation and arbitration.
• Transform unenforced court rulings and underperforming loans into liquid assets, moving beyond their status as legal documents.

Law firms

Law firms are also able to benefit from legal finance. Legal firms are able to use legal finance to:

• Present business opportunities with terms that are appealing to clients or explore new areas of high-value growth.
• Provide an alternative financing solution for clients billed on an hourly basis who may be feeling overwhelmed by fees.
• Manage the cash flows linked to impending contingent work.
• Oversee partner compensation in law firms primarily focused on hourly fees for contingent work.
• Provide fee advances for outstanding receivables without the need to discount fees or jeopardise client relationships.

How can Annecto Legal assist?

Annecto Legal can assist clients in finding funding that works for their business or law firm. Annecto Legal was established to help businesses pursue legal claims and remove any perceived cost barrier to litigation.

The application and process for legal finance can be complex for the unwary. Therefore, we recommend that you get in contact with our team as soon as possible so that we can provide the guidance that you require.

We provide our services to a range of clients, including businesses, solicitors, commercial insurance brokers, financing professionals, insolvency practitioners and liquidators.

Call us today 0800 612 6587, or our business development director, Mark Beaumont, can be contacted by email mark.beaumont@annectolegal.co.uk

Annecto Legal is registered in England and Wales.