Multiple business can often be done very well in one financing vehicle; this is called portfolio financing. Cases within the portfolio may be a mix of claims and cases in which the company is the defendant. Such a mix generally lowers the cost of the capital provided because the risks are spread; the lender is no longer betting on one horse but on several.
A brief overview:
What is portfolio financing?
- Litigation funding financially enables a company to file a lawsuit.
- The funder pays all costs and when the case is won he receives a fee. At a loss, he receives nothing. “No win, no fee.”
- Financing several cases at once within a single litigation portfolio is called portfolio or portfolio financing.
- As a rule, a portfolio contains six or more strong claims against an opposing party providing redress.
- All kinds of commercial disputes can be included in the portfolio.
What are the benefits of portfolio financing?
- The main advantage over “single-case” financing is that the risk (of loss) is spread over several cases. Less risk means better financing terms for the company.
- A portfolio may include cases in which the company is a defendant rather than a plaintiff. Single-case financing does not preclude this, but the terms are more difficult to shape.
- The funding received is repaid only if the portfolio is successful (in principle, this is the case when more cases are won than lost).