Crowdfunding Legal Expenses for Litigation and Defense

Author: Ian C. Langtree - Writer/Editor for Disabled World (DW)
Published: 13 Jan 2015 - Updated: 2 Sep 2026
Publication Type: Informative

Table of Contents:
Synopsis - Definition - Overview - FAQs - Insights, Updates - Related Content

Synopsis

This informative article discusses how individuals facing legal expenses, including litigation and trial defense costs, can utilize crowdfunding platforms to raise necessary funds. It highlights the growing trend of third-party funding in the legal sector, where numerous contributors support legal disputes either by investing in cases for a contingent fee or by donating to causes they believe in. The article also provides a list of platforms that facilitate crowdfunding for legal expenses, such as GoFundMe, Indiegogo, and CrowdJustice. Additionally, it emphasizes the importance of consulting legal professionals to navigate potential legal and ethical considerations associated with crowdfunding for legal matters..

At a Glance

• 1 - Many crowdfunding platforms prohibit campaigns tied to hate speech or abuse. Some sites also decline to host fundraisers for certain controversial legal cases.
• 2 - Cases with wide public impact or controversial rulings often attract more contributors. Rulings that could affect major tech firms may draw significant backing from large donors.
• 3 - Third-party funding in the legal sector has grown steadily over recent years. Backers may invest in a case for part of a contingent fee or simply donate to a cause they support.
• 4 - LexShares operates as an online marketplace connecting plaintiffs in commercial disputes with investors. Its Marketplace Fund I lets accredited investors back multiple legal claims through a single allocation.

Topic Definition

Litigation Crowdfunding

Litigation crowdfunding is the practice of raising money for legal expenses by gathering many small contributions from a large group of people, usually through online platforms. It gives plaintiffs and defendants a way to cover the cost of criminal defense, custody disputes, civil rights lawsuits, and other legal matters when they cannot afford attorney fees or court costs on their own. Supporters may donate to a cause they believe in, or in some models, invest in a case in exchange for a share of any eventual award. Because the approach carries both legal and ethical considerations, and because campaign success is far from guaranteed, anyone thinking about it should speak with a qualified lawyer before starting a campaign.

Overview

What is Crowdfunding?

Wikipedia defines Crowdfunding as "The practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet. Crowdfunding is a form of crowdsourcing and of alternative finance."

In 2015, it was estimated that worldwide over US$34 billion was raised this way. Litigation crowdfunding allows plaintiffs or defendants to reach out to hundreds of their peers simultaneously in a semiprivate and confidential manner to obtain funding, either seeking donations or providing a reward in return for funding - Wikipedia.

The legal sector has seen a steady increase in 3rd party funding over the last few years, where websites are promoting the use of litigation crowdfunding, where hundreds or even 10's of thousands of people can assist with legal dispute costs, either by investing in a case in return for part of a contingent fee, or offering funding donations to support a legal right that they believe in.

It is possible to raise capital to cover legal costs for criminal defense, custody fights, civil rights lawsuits etc., particularly if enough people provide donations to your crowdfund campaign, your case involves controversial issues, or a possible court ruling that may affect many people who may see themselves facing the same, or similar circumstances, at some time.

If a possible ruling or decision may negatively affect the high finance online tech world, including popular websites, or the Internet in general, then the chances of you receiving major funds from big players to support your battle, or legal defense, may increase significantly!

Crowdfunded Legal Litigation and Defense Donations Websites

This is a list of just some of the websites that provide specific categories for crowdfunded legal donations.

• GoFundMe: Launched in 2010, GoFundMe states it is the world's largest social fundraising platform, with over $4 billion raised so far.
• Indiegogo: Indiegogo is an online crowdfunding venue for people and entities seeking to raise funds for their own Campaigns and to contribute to the Campaigns of others.
• FundRazr: Start a FundRazr for legal costs, red tape, regulatory expenses or other legal fees. Fundraising for lawyer bills, estate expenses, administration or contracts.
• Funded Justice: From Their Website: The only place on the internet that is FOCUSED on helping people harness the power of crowdfunding to raise money to hire attorneys or right a social wrong - We transfer funds to you as quickly as we can process the credit card donations. No need to wait for a campaign to finish.
• GoGetFunding: GoGetFunding is a crowdfunding website that lets you raise money for anything that matters to you. Do you need to raise money for legal expenses such as a legal defense fund? Create your campaign in minutes and rally support from those that believe in you and your cause.
• CrowdJustice: CrowdJustice applies the crowdfunding model to the law with funds going to the lawyer's client account. Creating a crowdfunding page at CrowdJustice only takes a few minutes.
• JustGiving: According to the JustGiving website they have helped people in 164 countries raise over $4.5 billion for good causes since they were founded in 2001.
• FreeFunder: FreeFunder was created in order to provide a completely free option for people who are raising money for personal causes. FreeFunder allows fundraisers to create free personal crowdfunding campaigns, with NO platform fees.
• LexShares: The LexShares platform, launched by co-founders Jay Greenberg and Max Volsky, is an online marketplace for litigation funding, similar to equity crowdfunding. LexShares connects plaintiffs in commercial legal disputes with investors to fund their cases. LexShares Marketplace Fund I (LMFI) provides accredited investors with the ability to invest in multiple legal claims through a single fund allocation. LMFI will invest in claims posted to the LexShares platform as well as other litigation finance opportunities.

Important Notes

• While some crowdfunded justice campaigns go viral and raise well over their expected targets, many do not!
• Many crowdfunding firms have policies prohibiting funding involved with hate speech or abuse.
• Some major crowdfunding sites have resisted hosting campaigns that raise money for legal fees in specific, controversial cases - (Wired)
• Litigation Investment: Not Unethical, But Not Not Unethical Either - Third-party interference with litigation is one of the biggest ethical concerns when it comes to investments, according to a recent article by Lawyerist.
• ALWAYS, discuss legal advice with your lawyer or attorney BEFORE doing anything, INCLUDING creating a crowdfunded legal campaign of any type.

Frequently Asked Questions

Is money raised through legal crowdfunding taxable

Funds treated as personal gifts are often not taxable to the recipient, but money tied to investment returns or contingent fees can be. Because rules vary by country and situation, confirm your obligations with a tax professional.

What happens to donations if a legal case is lost

In most donation based campaigns the money has already been spent on legal costs and is not refunded to contributors. Backers generally understand they are supporting an effort rather than guaranteeing an outcome.

Do crowdfunding platforms charge fees for legal fundraisers

Many platforms deduct a payment processing fee and some also charge a platform fee on funds raised. A few services advertise no platform fees, so compare terms before choosing one.

Can a lawyer set up a legal crowdfunding campaign for a client

Some platforms are built so funds go directly to a lawyer client account, which can involve the attorney in the process. Lawyers should check their local bar rules on client funds and solicitation first.

How long does it take to receive crowdfunded legal funds

Some platforms release money as donations are processed while others hold funds until a campaign ends. Processing times for transferring money to your account can range from days to a couple of weeks.

Is litigation crowdfunding legal in every country

Rules differ widely, and some regions restrict third party funding of lawsuits or investment based legal finance. Check the laws in your own jurisdiction and get legal advice before launching.

What information should a legal crowdfunding page include

A clear explanation of the case, the amount needed, and how the money will be used tends to build trust with potential donors. Regular updates help keep supporters engaged throughout the campaign.

Who can invest through litigation finance marketplaces

Investment platforms that fund commercial claims typically limit participation to accredited investors who meet defined income or asset thresholds. These arrangements differ from donation based fundraising open to the general public.

Insights, Analysis, and Developments

Editorial Note: While crowdfunding opens doors for those strapped for cash in legal fights, it's not a silver bullet - success often hinges on a compelling story, a willing crowd, and a bit of luck, leaving many to wonder if justice should bank on viral campaigns rather than systemic fixes. Crowdfunding offers a viable avenue for individuals burdened by legal expenses, it's crucial to approach this method with caution. While crowdfunding for legal expenses offers a promising avenue for access to justice, it's crucial to approach this method with caution. The success of these campaigns can be unpredictable, and ethical considerations must be carefully weighed. As the legal landscape evolves, it's essential to stay informed about the latest developments in litigation funding and consult with legal professionals to ensure compliance with relevant laws and regulations..

Author Credentials: Ian is the founder and Editor-in-Chief of Disabled World, a leading resource for news and information on disability issues. With a global perspective shaped by years of travel and lived experience, Ian is a committed proponent of the Social Model of Disability, a transformative framework developed by disabled activists in the 1970s that emphasizes dismantling societal barriers rather than focusing solely on individual impairments. His work reflects a deep commitment to disability rights, accessibility, and social inclusion. To learn more about Ian's background, expertise, and accomplishments, visit his full biography.