VIDEO: Five Common Myths About Litigation Finance

July 28, 2020

In this quick video, Wendie Childress dispels five common myths about litigation finance to help clients and their counsel better understand if this tool is a good fit for them.


Companies of all sizes are facing financial challenges right now as a result of COVID-19 and the current economic downturn. These companies may have valuable assets in the form of legal claims, the costs and risks of which can be offset through litigation finance.

Unfortunately, litigation finance remains largely misunderstood by corporate America.

Here are some key myths debunked:

Myth Number One.
Litigation finance is NOT just for plaintiffs despite this common misconception. Funding is available for plaintiff and defense cases, in single or portfolio investments, across a wide array of dispute types. They range from breach of contract cases, to appeals, international arbitration, and even bankruptcy where funding can be a tool for debtors or trustees.

Myth Number Two.
Capital from a litigation funder can be deployed by the client HOWEVER the client determines is best for its business, not just to pay for litigation. Use the capital to offset legal fees or ask for working capital for any business purpose, such as new product offerings or to expand the business. Funding is a tool to support your bottom line while you weather the storm of litigation.

Myth Number Three.
When working with a funder, client confidentiality CAN be maintained by taking necessary steps to protect the client's information. This includes signing a robust confidentiality agreement with a funder before turning over work product and otherwise avoiding sharing attorney client communications with the funder.

Myth Number Four.
You, not the funder, control your litigation. If a funder offers you an agreement that takes away any of your rights to control strategy or settlement, walk away. 

Myth Number Five.
Funding REALLY is non-recourse.  If you lose your case, you owe nothing. This is very different from paying for litigation from a legal budget or a loan from the bank. Funders understand the risks and good ones will want to help manage those risks and costs in ways to help your business thrive long-term. 

Validity is the most trusted funder in the US with the most experienced team. We understand the challenges you face in litigation and are here if you need us. Download our Guide to Litigation Finance, based on real events, or just give us a call to let us know how we can help.

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