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Utkarsh Gambhir talks about litigation funding and the rise of crowdfunding platforms as means of funding 

In the wake of the pandemic shake-up in the legal market, many litigators are relying on third parties for litigation funding. While this practice is common in Anglo-Saxon markets such as the United States and the United Kingdom, it is becoming more widespread in Europe and elsewhere. Technology will significantly affect litigation funding.

Gradually, governments are enacting new laws that enable third parties to fund litigation, and these are key players in the legal sector. No longer are high-cost proceedings being funded, but small and medium-sized proceedings are also being funded. 

Although we may have the idea that litigation funders are usually self-interested firms, crowdfunding platforms are on the rise and are a real novelty.    

The differentiating factor between the crowdfunding method and the traditional method of litigation funding is the variety of ways in which the funder is remunerated, whether through funding-based models (the funder expects a financial return, depending on the profits made from the litigation) or non-funding-based models (the funder does not expect a financial return, their financial support being a consideration in itself, or a donation). 

On the other hand, the norm today is still third-party litigation funding, which originates from funding in international litigation. Many funders encourage their clients to use pre-litigation funding to avoid last-minute settlements. 

Litigation finance is not an exact science and those involved in litigation are aware that much litigation is unpredictable. But a diversified portfolio can be profitable. Litigation crowdfunding is a stable method of earning a profit without fluctuations interfering. 

Litigation crowdfunding can bring about a real revolution in the legal sector, where a variety of investors can share in the profits made in legal proceedings.