Legal funding has become an essential part of the legal landscape, providing individuals and businesses with the financial resources they need to pursue legal claims. Two common forms of legal funding are client legal funding and third-party litigation funding. While both serve the purpose of helping fund legal matters, there are key differences between the two that are important to understand.

Client Legal Funding

Client legal funding, also known as client funding or plaintiff funding, is a type of financial assistance provided directly to the plaintiff by a funding company or law firm. In this arrangement, the plaintiff receives a cash advance to cover legal fees, living expenses, and other costs associated with pursuing a legal claim. The funding is typically non-recourse, which means that if the plaintiff does not win the case, they are not required to repay the advance.

Third-Party Litigation Funding

Third-party litigation funding, on the other hand, involves a third-party funder providing financial support to a party involved in a legal dispute, in exchange for a share of the proceeds if the case is successful. Unlike client legal funding, third-party litigation funding is typically used by businesses, law firms, or individuals with more substantial claims.

Key Differences

One of the primary differences between client legal funding and third-party litigation funding is the relationship between the funder and the funded party. In client legal funding, the funding company or law firm has a direct relationship with the plaintiff and provides financial assistance to the plaintiff to cover litigation costs.

Conclusion

In conclusion, client legal funding and third-party litigation funding are two distinct forms of legal funding that serve different purposes and cater to different parties involved in legal disputes. Client legal funding provides direct financial assistance to plaintiffs, enabling them to pursue legal claims without the financial burden of litigation costs. On the other hand, third-party litigation funding involves a separate entity providing funding to parties in exchange for a share of the proceeds if the case is successful.