How Third-Party Funding Impacts the Ever Changing Litigation Industry

A November 2017 article published on Law.com written by Monika Gonzalez Mesa discusses the evolutionary changes of the legal landscape for both smaller firms and larger boutiques brought on by the litigation funding industry.

Once thought of as a shady business, third-party litigation finance has slowly altered the legal playing field by allowing smaller firms the opportunity to take part in larger scale litigation that was previously only accessible to big firms working on an hourly rate and boutique firms willing to work on a contingency fee basis.

Third-Party Funding Helps Small Firms Take On Bigger Cases

How did this happen? Well according to Jose Astigarraga, former co-founder of the Miami-based boutique firm Astigarraga Davis, smaller firms can partner with a 3rd party funding company and take on more big-budget cases. In years past, boutique firms had a stronghold on long-lasting high-expenditure cases simply because a small firm would likely not bet on one case and put all of their eggs into one basket.

Law Firm Funding Helps Plaintiffs

This partnership has opened a new door for plaintiffs. According to Alan Kluger, founding member of Kluger, Kaplan, Silverman, Katzen & Levine, “the pool of lawyers available to try a case expands because young lawyers who otherwise could not afford to take the case on contingency can now get funding,” thus providing clients a larger pool of legal talent from which to choose. Now more than ever, Kluger believes that “the good lawyers are going to get a lot of work.”

In addition, plaintiffs are benefiting because boutique firms are now more willing to offer alternative fee arrangements because they can now share the risk of the case with a law firm funding company.

Third-Party Funders Have Changed the Game

According to Gonzalez Mesa, Astigarraga decided to leave his firm this year in part because third-party funders have changed the game. “In the old days, big firms traditionally were not interested in taking cases outside of an hourly rate for a variety of reasons, including that for the most part that was the model used by most firms,” Astigarraga said. “That gave a competitive advantage to firms that were willing and able to take on contingency risk. They were able to go into a meeting with a client and say, ‘The big firm wants you to pay hourly rates; I’m willing to share the risk with you.’ ”

Learn More About Thrivest’s Complete Line of Law Firm Funding Solutions

3rd party litigation funding is one of several cash flow solutions Thrivest offers to attorneys. For a detailed description of their full suite of law firm funding programs, please read their resource entitled “Plaintiff Funding: The Essential Guide.”