Commercial Litigation Funding Facts
Business owners involved in litigation arising from a commercial claim eventually face financial problems. Case resolution may take several years, and the frustrations arising from the process can be detrimental to a business’ bottom line, and a business owner’s emotional well-being. A money arrangement to bridge this temporary situation may save your business.
Commercial litigation simply means that two businesses use a court to resolve a dispute. A few examples of commercial lawsuits are breaches of contract, business dissolutions, disputes over non-compete clauses, franchise or shareholder issues, debt collection, and partnership disputes. In commercial litigation, both the plaintiff and defendant are business entities. However, as in the non-compete example below, some commercial litigation arises from situations taking place before both parties were recognized as separate businesses.
In April 2008, the Golden Tavern agreed to buy four locations of the Roadrunner Saloon. All establishments operate in Las Vegas, NV. The owners were friends, so the initial deal was…well…friendly.
By September 2009, after several delays to the deal closing, value of the Roadrunner Saloon was considerably lower than the 2008 price, and Roadrunner owners claim that the Golden Tavern orchestrated the situation by stalling the sale. Although the sellers admit that recent economic conditions impact the value of the business operations, Roadrunner Saloon owners allege that the excessive delays were deliberately used to drive down the assets’ value. The sellers are seeking monetary damages equal to the difference in the 2008 price and the resulting 2009 price.
The delay in closing the sale, Roadrunner owners claim, is a breach of contract.
Disputes over non-compete clauses often originate in a contract between an employee and employer. Also referred to as a non-competition agreement, this contract verbiage limits the activity of an employee after he or she leaves a company. From a business perspective, this is vital. It lessens the likelihood that an employee, in whom a business has invested training and other resources, will leave a company and open a competing business. Problems arise when the contract verbiage is interpreted as unreasonably limiting.
According to a St. Louis news website, Chris Lee, co-owner of “A Walk in the Park”, signed a non-compete agreement in order to work at a major pet supply retailer in 2003. Several years later, during the November 2009 Grand-Opening of “A Walk in the Park”, Lee and co-owner Mark Langevin were served with a lawsuit. The major pet supply retailer was suing over the non-compete clause. Lee’s lawyers claim that the required agreement was so overbroad that it unfairly prevented Lee from working as a dog groomer anywhere in the St. Louis area.
LawCapital specializes in the commercial litigation funding of settled and pre-settled commercial lawsuits. During the funding process, LawCapital requests some of the case documentation, underwriting evaluates the lawsuit to determine whether funding can be extended, and if approved, a contract is issued for the injured party and his/her attorney to sign. The injured party’s attorney then repays the lien when the case is resolved. All funding is non recourse, which means that if for any reason, there is no recovery on the case, then no money is owed back.