Third-Party Litigation Funding:
The idea of Third-Party Litigation Funding (TPLF) has quickly emerged as a game-changer, potentially opening courtroom doors for many who felt they had been shut out.
- TPLF, often referred to as litigation finance, is a financial arrangement in which a third party (with no prior connection to the litigation) in a legal dispute provides funding to support the plaintiff’s pursuit of a legal claim.
- In return, the third-party funder receives a portion of the proceeds if the case is successful.
- Plaintiffs do not have to repay the funding if their lawsuit is not successful.
- This funding model allows entities to bring lawsuits without shouldering the financial risks associated with litigation.
- The emergence of TPLF has been driven by various factors, including the escalating costs of legal proceedings, the complexity of modern litigation, and the desire to level the playing field between parties with disparate financial resources.
- Disputes that attract TPLF generally include commercial contracts, international commercial arbitration, class action suits, tortious claims like medical malpractice and personal injury claims, anti-trust proceedings, insolvency proceedings, and other like claims that have a calculated chance of resulting in a substantial monetary award.
- TPF is not expressly prohibited in India. In fact, several judgments highlight its benefits and express that there is a need for its regulation.
