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  • Armadillo Staff

How to Properly Evaluate a Funding Partner

Updated: Apr 10

The selection of a litigation funding partner is a critical strategic decision with the potential to elevate a firm to new heights or to draw it into uncharted, and potentially treacherous, waters. As a stakeholder in this field, we recognize the significance of partnership compatibility. It's not merely about matching a name with a portfolio; it's about identifying a shared vision for success and a commitment to mutual growth.

 

Our goal is to empower you with a comprehensive framework for evaluation, ensuring that when you're on the cusp of choosing a lending partner, you're armed with the right questions and considerations to make a discerning decision. Make certain to conduct a thorough vetting process, one that scrutinizes potential lenders through a lens of expertise, transparency, and aligned interests.

 

 

Top Ten Questions to Ask a Litigation Lending Partner

 

Before committing to a lending partner, consider these ten probing questions:

  • Experience and Focus: What track record do you have in the mass tort arena, and in which legal domains do you excel?

  • Transaction Size and Volume: Will you delineate the scope and frequency of your transactions?

  • Underwriting Expertise: What approach do you take in valuing cases, and how do you construct cash flow projections?

  • Team Composition: Can you introduce us to the team handling our financing?  What credentials do they hold?

  • Cost Transparency: Can you itemize all associated fees, costs, and obligations?

  • Term Sheets and Funding Agreements: How do you assist in the interpretation and negotiation of these documents?

  • Regulatory Compliance: What measures do you employ to ensure regulatory adherence, and can you share your compliance track record?

  • Client References: Are you willing to provide testimonials from past transactions?

  • Service Scope: Beyond financing, what supplementary services do you offer, and at what cost?

  • Exclusivity and Reporting: Is an exclusivity contract part of the agreement, and what does your reporting cycle look like?

  • Ideal Firm(s): Don’t hesitate to inquire about the types of firms they seek out for partnerships.

 


Red Flags in Choosing a Lending Partner


Watch for lenders who obscure fees, boast minimal industry experience, have a spotty compliance history, or lack credible references. A partner's inability to give straightforward, comprehensive responses to your questions is a significant red flag.



Strategic Guidance

 

When it comes to litigation financing, the stakes extend beyond the mere provision of funds; they encompass the invaluable guidance and expertise a funding partner brings to the table. The role of a strategic advisor in this realm cannot be overstated. With the right advisor, your firm is not just making sound financial investments; you are tapping into a wellspring of seasoned counsel, robust strategies, and industry foresight that can be the deciding factor in high-stakes litigation. It's about having a partner whose expertise and advisement are as pivotal as the capital they provide.


Armadillo's partnership with premier mass tort firms across the United States is a testament to our deep integration within the industry and our understanding of the formula for success. Our role transcends that of a mere capital provider; we serve as strategic advisors, leveraging our extensive experience and industry connections to guide our partners toward prudent investments, effective marketing strategies for new case inventories, and the scaling of operations to facilitate growth. With Armadillo, law firms gain more than financial support—they access a repository of strategic insight that aids in navigating the nuances of mass tort litigation, optimizing portfolio performance, and achieving scalable, sustainable expansion.



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