Litigation finance is an emerging industry, where many litigation funding brokers pose as funders in order to draw in business. The key difference between a true litigation funder and a broker is that a litigation funder controls their own capital, while a broker is simply responsible for referring you to a funder while they take a cut of your funding.
The easiest way to quickly recognize a broker is to ask if they control their own capital for making investments. Anything other than a clear, resounding "yes" is a likely indication that the company is a broker who will take your claim details and refer them to actual litigation funders.
While brokers in the litigation finance market can be experts in arranging non-recourse litigation and arbitration funding, the cost of capital becomes higher as a result of going through a middleman. For brokers to play an effective role, mechanisms that align their interest with the clients must be in place. For instance, some brokers may have agreements that incentive them to refer you to the highest priced funder, rather than helping you to obtain the most reasonable funding for your case.
As a litigation funder, Legalist rarely works with brokers and is always careful to structure arrangements that put the clients interests first. You can find verification of our credentials as an independent litigation funder in the Wall Street Journal.