Litigation funding—also known as litigation financing or third-party litigation funding (TPLF)—provides a person or entity with the money to pay attorney fees, expert witnesses, and other costs necessary for litigation. Litigation funding is essentially a loan, secured by the proceeds of the expected settlement or collection of judgment in a lawsuit, and is designed to allow persons or entities without the necessary resources to pursue valid claims in litigation.
In Michigan, litigation funding, also known as litigation financing or third-party litigation funding (TPLF), is a practice where a third party provides financial assistance to a litigant to cover legal expenses such as attorney fees and expert witness costs. This funding is typically non-recourse, meaning that the funder will only be repaid from the proceeds of a settlement or judgment if the litigation is successful. While Michigan does not have specific statutes directly regulating litigation funding, the practice is generally governed by contract law, and any agreements must comply with state laws regarding interest rates and consumer protection. Additionally, ethical rules for attorneys in Michigan require that they do not share legal fees with non-lawyers and maintain independence from funders. It is important for parties entering into a litigation funding agreement to ensure that the terms are clear and that the arrangement does not violate any applicable laws or ethical standards.