The return on this type of financing is more than 50%-100% in some cases which is considerably better return on any investment done in any conventional corporate finance deals in the Indian Market.
The corona virus pandemic has hit the economic growth of India and lots of businesses suffered huge losses, causing more legal contractual disputes between the companies in India. Indian companies have only one option to fight the case and pay hefty legal fees to lawyers who are very expensive. Companies are not able to meet the working capital requirement due to payment of hefty legal fees to the lawyers. Number of cases having good merits are going uncontested in India. Last year two notable examples of third-party funding have raised awareness amongst corporate finance advisors to see litigation funding as an alternate means of financing: the monetisation of arbitration award in Hindustan Construction Company and Patel Engineering. Major infrastructure companies in India are struggling with stressed assets and huge pending claims, litigation funding would definitely help them to settle their claims. India has more potential in the monetisation of claims than London, Singapore, and Hong Kong. The return on this type of financing is more than 50%-100% in some cases which is considerably better return on any investment done in any conventional corporate finance deals in the Indian Market. Indian legal sector is growing very fast for last few years. However, the clients are still very conscious spending money on litigations even having good merits. Litigation Funding would be welcomed by the clients and will have excellent future in India. However, India needs a strong regulatory framework focusing disclosure, qualifications and conduct of litigation funders.
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Source: http://www.businessworld.in/article/Future-Of-Litigation-Funding-In-India/19-02-2021-379109/
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