Litigation financing—also known as legal finance—is a specialized arrangement where a third-party capital provider funds all or part of the legal expenses for a lawsuit in exchange for a financial stake in the eventual monetary recovery or settlement payout. Because these funding agreements are typically structured on a non-recourse basis, if the plaintiff loses the lawsuit and recovers nothing, the funder receives no return and absorbs the loss. It enables corporations and individuals to pursue meritorious claims without draining working capital.