Lawyers Turn to Litigation Financing
Litigation Financing, The New Norm
Litigation financing can come in the form of receiving loans from financial service providers to fund disbursement costs and the cost of hiring expert witnesses. Litigation financing is becoming more popular and common among lawyers in Toronto, and Canada, especially in the practice area of personal injury.
Usually, it’s solo practitioners depending on these services as well as small or medium sized firms that have reached or exceeded their capital for funding cases. As a result, most litigation financing services position their lending programs as an “access to justice” initiative that improves plaintiffs’ and lawyers’ access to courts. BridgePoint, a litigation financier in Toronto, positions itself as a player that “levels the litigation playing field.”
BridgePoint’s positioning is confirmed by real testimonials. Heidi Bergeron, a PI lawyer in Toronto, says that for the first time in eight years as a PI lawyer, she has begun using various products to stay on a level playing field with Insurance defence lawyers who have deep pockets and can prolong cases.
Jasmine Daya, a personal injury lawyer in Toronto explains that “Insurance companies have lots of money. Plaintiffs’ lawyers don’t have as much as insurance companies, so they will drive the files harder and longer. Meanwhile, we [plaintiff-side lawyers] have to carry the disbursements.” The reason why this is particularly taxing on these lawyers is that in the practice area of personal injury, lawyers operate on a contingency-fee basis and therefore are necessarily carrying the costs until a settlement is made or damages are awarded. Additionally, in Toronto courts, it can take years to go to trial.
What if the plaintiff’s case is lost? Does the lawyer suffer losing all the capital invested in the case in the form of disbursement and expert reports? Bergeron says she has begun using disbursement insurance and highly recommends its use. It falls under cost protection insurance. Firms that use cost protection insurance on their case files give “plaintiffs more confidence to build their file throughout the process.”
Some have asked why lawyers just don’t use banks for these services. Daya explains that they have become very difficult to work with and has naturally turned to the best option available which understands the legal industry and caters to it exclusively.
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