Martin Partington: Spotlight on the Justice System

Keeping the English Legal System under review

Litigation funding – meeting the cost of litigation

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One poorly understood development in the civil litigation field is that of litigation funding. This refers to the practice of the provision of financial resources to a claimant so that litigation can proceed. Litigation Funding is the arrangement through which a litigant obtains the financing of all or part of its legal costs from a private, commercial Litigation Funder who has no direct interest in the proceedings. In return, and assuming the case is won, the funder will receive an agreed share in the proceeds. If the claim is, however, unsuccessful, the funder will lose its money and nothing will be owed to it by the litigant.

The share in the proceeds is negotiated between the funder and the litigant. This financial reward of the funder can take a variety of forms. It typically consists of either a percentage of the damages recovered, or a multiple of the amount advanced by the funder, or combination of these options. Litigation Funding provides a cost effective financing tool that must be taken into consideration by solicitors when planning the funding of a case. Solicitors will have to bear this in mind when advising on this issue.

The Litigation Funding market in the UK has, in the last decade, experienced increased mainstream attention due to its potential to provide a valuable means for access to justice, particularly for SMEs.

However, Litigation Funding is not a substitute for legal aid. This financing tool is currently limited to commercial cases of a high value. It is not suitable for consumer cases, personal injury cases or generally claims that do not carry a sufficiently high level of damages.

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Written by lwtmp

November 7, 2013 at 9:14 am

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