Litigation funding and insurance may appear to be similar, but they are quite different.
Litigation funding happens when a third party provides financing for a plaintiff’s litigation costs in return for all or part of the recovery while the case is pending. With litigation insurance, the payment is only provided once the case is finished. Funders cover costs as they come up, while an insurer will cover costs if there is a loss. In litigation funding, the money is received up-front. For that reason, litigation funders tend to finance high-stake cases, while insurers are more likely to finance smaller cases.
With litigation funding, a plaintiff has up-front money they can use to hire the best staff and have the best resources so they can fully pursue a case without worrying about the bottom line.