Litigation financing, also known as lawsuit funding, has been around for decades in one form or another, though it has been more pervasive in recent economic times. With the fallout from mortgage-backed securities comes an increase in available funds in this new and emerging financial market. In a very broad sense, litigation financing occurs when a claimant or claimant’s attorney obtains a loan to be repaid out of the proceeds from any settlement or judgment. These loans are frequently “non-recourse” loans, meaning the lender cannot seek repayment unless the claimant makes a recovery.

Two Flavors of Funding

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