Sharing the cost burden of pursuing litigation - litigation funding

Barely three months after controversial court fee increases took effect in April 2015, the Government announced last year that there would be yet further increases to come.

For many, this relentless upward hike in court fees is a real obstacle in achieving access to justice. Those with potential disputes are likely to be deterred from pursuing action for the simple fact that they are unable to afford the upfront costs of commencing proceedings. For many, this relentless upward hike in court fees is a real obstacle in achieving access to justice. Those with potential disputes are likely to be deterred from pursuing action for the simple fact that they are unable to afford the upfront costs of commencing proceedings.

However there are options available. Litigation funding i.e. funding by a third party lender is evolving rapidly to provide more flexible products that are suitable not just for the higher value claims that funders traditionally seemed to favour but lower value claims as well. Some lenders even specialise now in the SME Market. Here at Trethowans we work with a number of reputable and recommended funders/brokers that we can introduce you to for assistance with funding your potential claim. If we can see that you have a good case we can assist you in finding a way of pursuing the matter by looking at the availability of funding. Moreover, even if you do have the ability to fund litigation yourself, it may be favourable to opt for litigation funding because you can share the risk of pursuing a claim, finance multiple claims that your limited budget would otherwise not allow and/or take the cost of litigation off the company balance sheet entirely for commercial convenience.

What is Litigation Funding?

Litigation funding is an agreement with an impartial third party funder to finance all or part of the legal costs of pursuing litigation in return for a fee payable from the proceeds recovered by the funded party. Litigation funding may be used in conjunction with:

  • pre-existing cover for legal expenses in the form of before the event insurance;
  • an indemnity for legal expenses in the form of after the event insurance;
  • a conditional fee agreement; and
  • a damages based agreement.

The Availability of Litigation Funding:

Recent years have seen a vast emergence of litigation funding and specialist litigation funding companies enter the UK market. Due to the diverse nature of funding companies now available, the availability of litigation funding in most cases has significantly increased and the market has become more flexible than it ever has been before. Therefore those with a potential dispute need not be put off pursuing litigation as at long last the litigation funding market offers a genuine alternative.

The varying options of litigation funding available are vast but can in brief include:

  • full case funding;
  • partial case funding (i.e. court fees and other disbursements);
  • contingent based funding (i.e. nothing to pay if you lose);
  • retrospective funding (i.e. costs and disbursements not yet paid); and
  • in certain cases funding to cover the costs of a solicitor investigating the merits of a case.