Imagine spending years in legal battles and having to bear all the costs only to emerge with nothing but mounting debt. It’s a nightmare for anyone who’s been through it, but third-party funding has come in to ease the burden for those who can’t afford it. With a third party funding your litigation or your international dispute, you can pursue your claim without having to worry about finding the money. But who really owns the claims? This blog post gives you an in-depth understanding of third-party funding and how claim ownership works.
What is third-party funding?
Third-party funding is an arrangement between a third party funder and a party involved in arbitration or litigation. The funder provides financial assistance to the claimant in exchange for a portion of the amount recovered. This financial assistance covers the cost of litigation, such as legal fees, administrative costs, and expert witness fees.
How does it work?
After executing an agreement with the funder, you’ll receive funding in return for a percentage of the recovered amount should your claim succeed. The funding covers your litigation and arbitration fees and expenses until settlement or judgment. The percentage that will be payable to the funder will depend on the agreement terms you sign. Typically, the amount payable to the funder ranges between 20% and 40% of the amount recovered.
Who owns the claims?
In a third-party funding agreement, the funder does not own the claims. The claimant continues to have full control over the claim and continues to be the legal owner of the action. The funding is usually provided on a non-recourse basis which means the funder will only recover the amount advanced plus charges if the claim is successful. If the claim fails, the funder bears the loss.
What are the benefits of third-party funding?
The main benefit of third-party funding is that it enables claimants to pursue their claims without raising the cash to pay for litigation. This allows parties, who would not have taken legal action or arbitration because of the expense, to pursue and recover compensation. Furthermore, the funder is motivated to assist the claimant in every way possible to ensure that the claim is successful. This is because the funder has a vested interest in the outcome of the case. To learn more about third party funding, please visit Third-party funding | United Nations Commission On International Trade Law
What can go wrong with third-party funding?
Third-party funding isn’t a guaranteed victory but it has a higher percentage of success than not having funding at all. However, there are cases where things can go wrong. If the agreement with the funder has not been reviewed carefully, some of the details may be lost, and misunderstandings are bound to happen. There are possibilities that the funder may interfere with the claim’s handling or even put too much pressure on the claimant to accept settlement offers.
Third-party funding is an excellent way to ease the financial burden of litigation for those who can’t afford it. It enables a claimant to pursue a claim without having to worry about finding the money to cover the cost of litigation. Moreover, it does not affect the claimant’s ownership of the claim, allowing the claimant to pursue claims with the assistance of an experienced funder. However, there are possible problems that may need proper attention, making it crucial to review the agreement contents before entering into such an arrangement. Understanding third-party funding and claim ownership keeps the claimant well-informed and well-protected for any decisions that they may make.
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