Litigation funding, insurance and risk transfer
Funding a dispute can be a daunting prospect, with the risks and complexities that often brings. But disputes have been with us for centuries, and are here to stay. There are those who are waiting to press on with their disputes once more cash is available, and/or their opponent’s asset position has strengthened, but many who could be considering giving up litigation altogether because they simply can’t find the means to fund it.
We can help with this dilemma, by seeking third party litigation funding on your behalf, which may include purchasing an after the event insurance (ATE) policy to cover you for adverse costs awards; in effect, transferring all or part of the financial risks of litigation away from you.
We will be pleased to provide information concerning third party funders and/or ATE insurance that will enable you to consider your options. We can sometimes provide part of the funding solution ourselves, through full or discounted Conditional Fee Agreements, and work with brokers to seek suitable funding and insurance products on your behalf.
Third party litigation funders, taken from the world of finance, hedge funds and investments, can find funding solutions to pay for Counsel, experts, other disbursements, partly funding solicitor’s fees and, if placed, the ATE insurance premium. These funders are often instrumental in putting whole packages together. Careful due diligence is carried out with the legal team, not least in relation to the financial soundness of the intended defendant, and in return for agreed cash injections the third party litigation funder will take a tiered percentage of the net proceeds recovered from the litigation. These third party litigation funders epitomise how litigation can sometimes be viewed exclusively as an investment, rather than, say, a battle, act of altruism or emotional crusade. Whilst insolvency practitioners were pioneers in this field, civil and commercial litigation cases are now being progressively funded through these means.
Some might say that it is unfair for a third party, with nothing other than a financial interest in the case, taking perhaps 50% of the net proceeds of litigation. However, this begs the question whether a litigant, who would otherwise not have pursued the case, prefers 50% of a substantial net sum, rather than 100% of nothing. And there is no reason in principle why only the cash strapped might look at this option. Commercial organisations of substance, that have the means to fund cases through to trial, may nevertheless also be attracted by the prospect of risk free litigation.
Litigation funding is making its way towards a tipping point. As a pioneer in this developing area, Rawlison Butler will continue to work with funders, brokers and insurers to lead the way.
For further information on this or any other litigation issue, please contact Stuart Evans by emailing Stuart or by calling him on 08450 990045, or speak to your usual contact in the Commercial Disputes Team.
Here is a selection of articles we have written on issues relating to mediation:
The rise of litigation funding
The Jackson Review on litigation costs - the winners and losers