Litigation funding is becoming increasingly common in commercial disputes, yet several misconceptions still prevent solicitors and clients from exploring it as a viable option. From concerns about case size to confusion around eligibility criteria, outdated beliefs often stand in the way of informed decision-making.
Myth 1 – Litigation Funding Only Applies to Big Corporate Cases
It’s a common misconception that third-party funding is reserved for large-scale or high-profile claims. In reality, litigation funding is available from https://www.novo-modo.co.uk for a wide range of commercial disputes, including shareholder disagreements.
Myth 2 – You Need a 1:10 Costs-to-Damages Ratio
While funders do look at cost-to-damages ratios to assess whether a case is commercially viable, the long-held idea that a 1:10 ratio is essential is no longer accurate. Many funders now consider a more balanced view.
Myth 3 – Only Large Claims Are Worth Funding
Although high-value disputes once dominated the funding landscape, the market has evolved significantly. Many funders now offer support for cases with funding requirements starting from just a few thousand pounds, provided the case shows good proportionality between costs and expected damages.
Myth 4 – My Client Can Afford It, So Doesn’t Need Funding
Even clients with available capital may prefer to keep litigation costs off their balance sheet. NI Business Info explains what a balance sheet is in further detail. For SMEs in particular, investing funds back into the business rather than financing legal action can be more strategic. Funding also helps reduce the financial strain over time.
Myth 5 – My Firm Already Offers CFAs, So We Don’t Need Funding
While conditional fee arrangements, CFAs, can reduce risk, they don’t always cover all costs-especially disbursements such as expert fees or court charges. Third-party funding can complement CFAs.
Myth 6 – Funding Is Too Expensive to Be Worthwhile
Cost concerns are valid, but funding terms vary widely between providers. Some charge a percentage of damages; others apply a multiple of invested capital.
Litigation funding is more accessible and flexible than many realise, helping more claimants pursue justice without bearing the full financial burden.