What are the Costs Associated with Litigation Finance in Australia?

Australia has started embracing litigation finance. It turns out that it’s how some people or businesses can receive money towards their legal cases. It pays for things like lawyer or attorney charges, experts and others. Instead, the litigation funder gets a share of the winnings if the case is won in court. However, if the case is lost, the person who receives the funding does not have to return the money to the funder. However, there are costs and fees in obtaining litigation finance in Australia. Knowing these costs assists people in coming to proper decisions.

1. Percentage of settlement or Award

The most common cost of funding in litigation finance is the cut that the funder gets from the amount granted in the settlement or award obtuse. This amount can vary widely. Part some funders may take anything between $20,000 and $40,000 of the settlement. Perhaps, in complex situations, this percentage may go higher. How much varies with the risk involved; the size of the case; and how long the case may take to be closed.

For example, if a person has collected $1 million from a case, and the funder takes his percentage as 30%, $300,000 will be paid to the funder. The plaintiff of the lawsuit would also be paid $700,000. This percentage cost is the largest expense incurred in the financing of litigation.

2. Administrative and Legal Fees

Pecuniary liabilities also include administration charges that are imposed by the litigation funders. These fees are the charges for running the case. Premiums may also differ depending on the funder. Some funders may also have additional costs for each expert witness, legal advice, and more services offered.

At times, the funders may factor them at the total monetary support provided to the experimented type. However, in other instances, these fees may be outside and could decline the overall amount that may be offered to the individual who has filed the lawsuit.

3. Interest Rates

Interest can also be factored into litigation finance. In another case where the case has taken years to be complete, the funder will tend to charge interest on the amount funded. This interest builds up gradually; For instance, for a funder who gives $ 100,000 as financing and requires 15% interest annually, this amount could expand tremendously by the end of a multi-year case.

The person involved is not always interested, but when he is, he is ready to accept less than that amount from the case.

4. Early Exit Penalties

If the lawsuit is resolved early on, some of the funders will take ‘earlier redemption’ fees. This fee is to provide for the funder’s expected profits. Though not all funders have this charge it could be worth asking about this issue. These early exit fees can be different and it becomes important to know them when entering into the funding agreement.

Final Words

Litigation finance in Australia is an option that provides plans to help meet legal expenses without paying for them upfront. However, one must focus on the expenses involved in the whole process including funder percentage, charges and any interest. Understanding such costs ensures that those being offered or searching for litigation finance know whether or not to take it. This blog has explored the costs that are associated with litigation finance in Australia. Reading this would enlighten you with all the costs and help you in making the right decisions for you.

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