US DR commercial litigation

In the United States, Litigation funding describes the provision of capital to a claimant in exchange for a portion of the proceeds from a legal claim—whether by settlement or award—where recourse is limited to the proceeds of the claim at issue.  Legal claims, as an asset or liability, are like a bond or other financial instrument; once a legal claim “matures” through a judicial award or settlement, it entitles the claim creditor to payment on the prescribed terms.  However, unlike a bond it is uncertain as to whether the asset will indeed mature.  A bond entitles the holder to payment on its face.  A legal claim must survive the legal system’s crucible to hold any value.  Thus, an investment in a single legal claim bears substantial risk.  Litigation funding redistributes this risk to the party that is most willing and able to bear and manage it.  The social benefit of this risk distribution is the allocation of capital resources to their highest and best use; allowing companies to invest in projects that optimize returns and promote general economic growth.
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