The larger market, which provides loans and revolving lines of credit to law firms with a broad portfolio of cases that are in various stages of litigation, most of which are not yet settled. The smaller market, being post-settlements, where a specialty finance company provides an advance or an outright purchase of earned, but not collected legal fees from cases that have already been settled. Whereas plaintiff’s attorneys often find it necessary to invest large sums of money in case development costs (including: expert witness fees, deposition charges, demonstrative evidence, etc.), receivables are created which are repaid from case proceeds on successful outcomes.
By the end of 2000, the litigation finance market segment had just over $100 Million in committed loans provided by a few legal finance companies. Litigation finance has grown steadily to more than a dozen companies with outstanding loan commitments in excess of $1 Billion. Some companies focus on the larger plaintiffs firms and tend to gravitate toward firms handling mass torts and class actions as the costs involved in litigating these matters is immense with lines ranging from a few million to in excess of $20 Million per firm supported by litigation dockets that often exceed $100 Million in value. Numerous small companies focus on smaller firms providing lines typically between $100k and $3 Million with case portfolio values that total between a few million to over $60 Million.
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