Define 'litigation funding'.

Litigation funding is a financial arrangement where a third-party entity provides monetary support to a litigant to cover legal costs associated with pursuing or defending a lawsuit. In exchange for this financial assistance, the funder typically receives a portion of the damages awarded if the case is successful. This arrangement allows individuals or businesses that may not have the resources to afford legal representation or the costs of litigation to pursue their claims without the financial burden associated with legal proceedings.

This option accurately captures the essence of litigation funding as it highlights the core principle of obtaining financial assistance specifically aimed at covering legal expenses in exchange for a share in the potential recovery from the case outcome. Other choices do not encompass the full scope of what litigation funding represents within the context of legal finance. For instance, loans to lawyers pertain to different financial arrangements and do not specifically involve the litigant or the sharing of damages. Similarly, cost-sharing agreements focus more on the collaborative aspect of funding rather than the third-party funding mechanism inherent in litigation funding. Finally, merely allocating funds for court fees overlooks the broader purpose of funding that includes comprehensive legal costs.