A good CFO takes enormous satisfaction in controlling costs. And in recent years, many CFOs have been given broad license to keep costs down -- or at the very least, to keep costs flat. Despite these efforts, one budget line has continued its unrelenting rise: litigation fees.

Legal costs have long been viewed as a necessary evil, and legal departments are frequently disparaged as corporate "cost centers." The financial control of legal affairs can be difficult for several reasons. As a general matter, visibility into lawsuits is often clouded by a labyrinth of arcane rules understood only by lawyers. More particularly, outside litigation fees are typically billed on an hourly basis, with little or no certainty given as to when a case will be resolved. For a CFO with ambition for cost control, the situation can be a significant source of concern.

Although unfamiliar to most CFOs, a new solution for addressing uncontrolled litigation fees is at hand. And it's a solution that should have special appeal for CFOs, as it uses fundamental financial concepts to address the issue. The solution -- known as "litigation finance" -- is a new field that is quickly emerging in the U.S. and the U.K., having taken root in Australia ten years ago.

Litigation finance companies treat litigation claims as corporate assets that can be "unlocked" for immediate value. As detailed below, the use of such financing has significant accounting benefits, and, as some companies are finding, can even turn cost center legal departments into revenue producers.