The truth about Litigation Finance
Whether you’re an investor already benefiting from great returns or someone brand-new to the investing process, Litigation Finance is an asset class you’ll want to consider as part of your existing or newly-formed portfolio.
As experts working within the financial investment industry will tell you, it poses an exciting option thanks to providing solid returns over a short-term investment period and minimum risk - which all sounds rather enticing to any investor, veteran or novice. Yet, surely it can’t be quite so simple. Or can it?
Let’s take a closer look into the world of litigation finance and find out more – including what it is and how it can help you to achieve financial freedom.
So, what exactly is Litigation Finance?
Any long-standing investors not yet aware of litigation finance might be surprised to hear it’s not a new investment option, permitted in the UK since 1967 and a successful one at that.
In simple terms, the strategy involves an investor – an individual or a company - funding a legal case and in return, receiving a share of any damages awarded. By backing a case with a high probability of success, litigation finance is deemed a low risk to the investor and often delivers a great return.
As an alternative asset class, it sits outside your traditional methods for investment – the banks, stocks and shares, or property. Instead, it’s a niche product and one with no reliance whatsoever on the global markets, which means no more constant checking of your stock exchange apps for fluctuation. Once you’ve invested, it’s over to the legal team to do its job.
Why is Litigation Finance becoming popular?
Across the legal space is a growing need for claimants to raise capital to fund their case, with many law firms unable to bring it forward without cash available to settle upfront fees. Litigation finance turns the situation around, providing a platform to claim while giving an investor the means to benefit from a successful outcome.
In the current volatile market, investors are looking for alternatives to the more traditional methods such as stocks and shares to acquire more capital. Not only are litigation finance returns outperforming other alternative investments, but they are going above and beyond mainstream asset sectors too.
Asides from wanting something a little different, consider the available stock. The coronavirus pandemic has caused economic turmoil, leading to an increase in legal cases – many of which by individuals in need of private funding. As the trend continues, it's likely more investors will look to the strategy as a means to boosting their existing portfolio through an asset class that is certainly capable of providing a generous return.
Sounds great, right? So, what’s the catch?
A ‘low risk, short term’ investment with premium returns does sound too good to be true.
As with most income, there is an associated tax liability. You’ll need to report your accrued capital on your tax return, which is then subject to CGT at the same UK rates for the tax year in question, whether personal tax (for individuals) or corporate tax (for companies).
Of course, as with all investing, litigation finance comes with risk. It is vital to understand in full precisely how the asset class works to mitigate risk where possible. Working with a specialist is advised to help you find opportunities that pose the least risk and giving you access to exclusive ones with high earning potential.
Need more information?
With a robust process framework including risk assessment, due diligence and security checks, an extensive network of global partners and a single point of contact throughout your investment, Greenpark Platinum assures proven performance at each step of your investment journey.
When you’re ready to ask more questions, like how to find a suitable case to fund – or cases, if you’re looking for more than the one opportunity – our team has all the answers.
To arrange a call with one of our investment specialists visit:
