What is litigation finance or a third-party funder in a patent case?

What should the financial model show?

Ask for worked examples of how money is distributed after different settlements or judgments, including a loss. Identify which expenses are funded, who pays unexpected costs, when the funder receives a return, and whether any obligation extends beyond the case. Do not judge the arrangement only by the percentage quoted at the start.

Must funding be disclosed?

Check the forum's rules and case-specific orders. For example, District of New Jersey Local Civil Rule 7.1.1 requires disclosure of specified nonparty, nonrecourse litigation funding arrangements. It calls for information about the funder, its financial interest, and approval rights over litigation or settlement decisions. That local rule is an example, not a nationwide disclosure rule.

What about control and confidential material?

Before sharing legal analysis or signing, have counsel review the proposed confidentiality terms, information requests, termination rights, and any settlement-consent provisions. Do not assume that an agreement with a funder settles privilege or discovery questions. Budget and evaluate the merits independently of whether funding is available.