Commercial litigation is sometimes a necessary part of today's business world, but it can also be a huge drain on a fledgling company's economic resources. Even if you believe that your case is a winner, the cost of taking it through the court system can be more than your small company can afford—which means that you may settle for far less than you are due. Commercial litigation funding, however, may change that dynamic and level the playing field for the better. Here's what you should know.

Commercial Litigation Funding Is Becoming More Accepted

Once uncommon, commercial litigation finance market has grown a lot in the last decade, and it's being accepted as both a viable and attractive option that can help companies finance their claims, manage their risks, and still keep liquid the funds that they need in order to continue operating.

In addition, the courts have recognized communications between funders and litigants and their respective attorneys as privileged communications--extensions of the work product doctrine. The work product doctrine protects the communications from exposure through discovery actions by the opposing litigant, which was once a major concern that limited the growth of litigation funding.

Investors Are Actively Seeking Profitable Funding Opportunities

Litigation funding is proving to be a profitable venture for a lot of investors. There have been some high-yield investments that have attracted a lot of attention. For example, one U.S. branch of an Australian-based company funded 10 cases during 2014 and helped clients recover nearly $100 million in jury verdicts and settlements. For its investment, the firm itself saw a gross return of $31 million and a net profit of $17 million.

Statistics like that help attract more investors every year into the U.S. legal system, where litigation funding had once been primarily something available only in other countries. While it isn't without critics, the movement toward litigation financing in the business world most certainly helps smaller litigants when they go toe-to-toe with larger companies in the courtroom. 

Finding Funding May Still Require Some Effort

Not every attorney wants to work with litigation funding, especially if they're unfamiliar with the process or just don't like the idea of involving a third party in the lawsuit. So if you think that you may need help funding the litigation that your company needs, make sure that your attorney is willing to work with you on it.

Second, be prepared to show the potential investor the strength of your case. Keep in mind that, for the funding company, this is an investment opportunity, so the investor has to be reasonably convinced that your case is solid in order for it to pass the case through its underwriters.

With the opportunities available for companies through litigation funding, never assume that you lack the capacity financially to take on a bigger company. Talk to your attorney instead about commercial litigation funding as part of your tactics toward a winning case.