Third parties with no connection to your case may agree to cover all or part of your legal costs.

Litigation is often a costly and time-consuming process that can put cash flow pressure on your business. It is possible, however, for a third party with no connection to the case to agree to cover all or part of your legal costs.

Why would a third party agree to cover your costs?

If a third party litigation funder agrees to cover your costs it is because they will look to apply a fee for doing so and making a return on that funding. They may look to cover all costs involved or some. They may fund:

• Solicitor’s Fees
• Barrister’s Fees
• Court or Tribunal Fees
• Disbursements.

Where can I find a litigation funder?

The UK is home to more specialist litigation funding companies than any other jurisdiction in the world and these companies are equipped with a Code of Conduct enforced by the Association of Litigation Funders (ALF). The ALF is the benchmark for ethical and commercial standards.

You are most likely to get a funder in matters of arbitration or insolvency litigation before they consider accepting an application for funding for a wider range of commercial disputes.

Who can receive funding?

Funding is typically offered to commercial clients, however, in certain circumstances, a funder may consider funding a case brought by an individual. Most funders strictly fund the claimant (the person bringing the claim) but where there is a sizeable counter-claim then a defendant (the person defending the claim) could be supported.

When assessing whether to fund your claim, litigation funders will look for the following:

1. Good prospects of success on liability

Whether or not your case has good prospects will need to be considered, in detail, by your legal team. In order to gain funding the prospects must be positive, that is, greater than 50%. Typically, a funder will look for 60% odds of success or higher.

2. Enforcement

The funder will need to be confident that an award can be enforced against the intended opponent. The funder will not provide funding where the case is against a company on the brink of insolvency, for example.

3. Legal Team

The funder will assess the quality and experience of the legal team by considering their credentials, years of experience and history of cases.

4. Timescale

Litigation in the Courts can take a considerable length of time. Third-party funders are aware of this and therefore will only fund disputes which are likely to be resolved within 18-36 months.

5. Cash Outcome

Funders will be reluctant to fund non-monetary claims, they will instead prefer to fund cases for monetary damages.

What if I lose?

If you are not successful, the funder will lose the capital invested in the case and will not receive a fee from you. They may also be ordered to pay the successful party’s costs.

It is a good idea for you to obtain After the Invent (“ATE”) insurance to cover the risk of receiving an adverse costs order. This is because if the funder takes the risk themselves the charge they will look to levy is likely to be far more expensive than purchasing ATE insurance.

What if I win?

If your claim is successful the funder will be entitled to a fee payable from the proceeds recovered, typically expressed as a percentage. Your solicitor would have assisted in coming to an agreement with the funder at the outset regarding this amount.

How we can help

If you have a potential claim or have had a claim against you please do get in contact with our Dispute Resolution team on 0330 404 0749.