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Can Litigation funding help Indian social enterprises and small businesses to defend their legal rig



 

Introduction


In a country like India, where the average turnaround time for a legal dispute is 6-10 years, litigation can be expensive. The alternate to litigation, i.e. ADR, does not present an alternative authentically, i.e. their turnaround time and cost resemble that of litigation. Therefore for social enterprises and small companies, the burden of funding their own litigation is not feasible; consequently, it has often been observed that Large companies freely indulge in breaching the contract as they rely safely on the assumption that the smaller company/business would not be able to get their right enforced under an agreement. As a result, the smaller business has to bear the burden of the excess costs involved as it is cheaper for them to bear the cost rather than venture into litigation.


How Litigation funding comes to the aid of small businesses?


Litigation funding can even help a small-scale local business win an international dispute. For example, a small-scale business in India gets a contract from a client in the USA for clothing manufacturing. For the production of said goods, the business owner purchases machinery and spends additional money to acquire skilled labour to fulfil the product's requirements. But the purchaser, without giving any appropriate reasons, cancels the order. Without proper litigation funding, the business would have resorted to selling the products at a local market and at a much lower price or even worse, they would've been forced to deal with a failed business venture. But with the help of litigation funding the company in the present scenario would be able to hire an advocate who specializes in such disputes and bring a claim against the purchaser for breach of contract.


Claim Buyout by Litigation Funders


Even if a business has obtained a favourable judgement or arbitral award before receiving the same, financing can still be committed. A decision might be instantly monetized and collected with the help of financing, mitigating the risk of loss and adding a sizable sum of money to the balance sheet right away. In other words, businesses do not have to lose up on the possibility of a potential recovery or self-fund the risk of an unclear result. Funding agreements are unique and, when designed well, may be advantageous to all parties. They can reduce the burden of risks on the parties and further speed up the recovery process without any additional cost. Litigation strategies can now be wholly integrated into a company's value- and service-delivery systems thanks to litigation finance.


Conclusion


Legalpay comes as a saviour for small businesses; by providing adequate resources, Legalpay helps the cause of those claimants who were wronged in a deal but, due to their financial position, were unable to back their legitimate legal claims. Such funding is a win-win for such small organizations as now they have a specialized entity taking care of their litigation, and even if they lose the litigation, they don't have to worry about the money spent on litigation as Legalpay provides such funding on a non-recourse basis, i.e. even if the litigation is unsuccessful Legalpay will not be taking the money spent on litigation back. Therefore by providing adequate funding, Legalpay boosts the confidence of small businesses and brings them on an equal footing so that they don't have to settle any dispute on unfavourable terms.

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