Almost every business and individual has been or will be affected financially by the novel coronavirus, COVID-19. Businesses are experiencing cash flow disruption as a result of, among other things, decreased demand for products and services and supply chain disruption. Similarly, individuals have taken pay cuts or been laid off. Retirees liquidating equities for cash have had to do so at decreased valuations.
The current health and consequent economic crisis, like prior economic crises, will also affect businesses and individuals (“claimants”) with lawsuits on foot and will give rise to actionable claims. These claims are properly construed as valuable contingent assets, although not ones reflected on a business’ balance sheet. Cash flow is paramount in the current climate, and monetising these assets without incurring the expense to do so will be as important to claimants now as it has been at any time in recent memory. One-off sources of revenue, like favourable judgments and settlements, can be impactful for claimants, especially in this environment.
Claimants funding the costs of their ongoing legal claims might be contemplating prematurely settling their claims for less than they are worth in order to reduce their expenditure. Many of these claimants should consider seeking outside finance from litigation funders to fund the costs of their claims and pursue their claims to a more favourable conclusion, but many will be unaware that litigation funding may be available to them.
Businesses and individuals also might unknowingly be sitting on good legal claims. Lawyers play an integral role in helping clients identify and economically prosecute these claims. Businesses and individuals might also be aware that they have good legal claims but, unaware of their financing options, might have decided to forgo prosecuting those claims due to current cash flow constraints. Now is a good time for lawyers to advise their clients that they may be able to obtain litigation finance to fund the costs of their ongoing legal claims or to initiate proceedings in relation to good claims which have not yet been prosecuted.