Evaluation: The plaintiff (the party initiating the lawsuit) or their attorney identifies the need for external funding due to the high costs associated with litigation. They then research and approach litigation funding companies or investors.
Application: The plaintiff submits an application to the chosen litigation funding provider. This application outlines the details of the case, expected legal costs, potential damages, and the likelihood of success. The funder assesses the case's merits and risks.
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Due Diligence: The litigation funder conducts a thorough review of the case, including legal merits, financial viability, and the plaintiff's ability to repay if they lose the case. They may consult with legal experts during this phase.
Funding Agreement: If the case is approved, the plaintiff and the litigation funder enter into a funding agreement. This agreement outlines the terms, including the amount funded, the repayment structure (usually through a percentage of the settlement or judgment), and any conditions.