With the squeeze on legal aid and clampdown on conditional fee arrangements, options for pursuing potentially good legal cases but where the opponent is much larger and with bigger resources have never been more narrow, and that’s without the woeful economic conditions that face both individuals and businesses.
One option for sharing the risk of litigation which has been steadily gaining ground and popularity is litigation funding, whetre a third party funder puts up the money for legal fees and other expenses, and possibly pays for the crucial after the event insurance to cover the contingency of losing and being ordered to pay the opponent’s costs.
The only problem for the average small business or individual is that litigation funding, save for one existing funder, First Class Legal, has only generally been available for big litigation cases, typically over £500,000.00 in value and upwards. This means unavailability for the vast majority of cases.
So, it’s potentially good news that there’s a new entrant to the market potentially offering to look at cases of £50,000.00 and over. Whilst this is still a smallish sector of the overall litigation market, it does bring forward the possibility of a larger number of commercial disputes where risk might be shared. The new funders, as reported by this week’s Law Society Gazette, are called Caprica and state that they have a war chest of some £100 million, so definitely a player.
The funders will always carefully pick and choose cases and if you are considering funding be aware that the fiunder may have many conditions, you may have to pay for an appraisal of your case with no guarantee an offer will be made, you will almost certainly need after the event insurance, your funders may not accept your chosen solicitors and perhaps most crucially of all, they will certainly want a significant if not the controlling decision making power if a settlement is offered. Such a settlement may not be what you would otherwise accept, so there are many compromises to be made with this sort of funding.
On the other hand, litigation is as often as not as much about tactics and bluffing as it is about the underlying law. If your opponent knows that you are well funded, he, she or it may well rapidly change assessment of the case and appetite to fight, which can often lead to a faster settlement.
All in all, well worth considering in our view. You may find that many litigation solicitors in smaller practices are not all that aware of litigation funding and may try to persuade you against it. They have a duty of acre to explore all funding options with you, so don’t be afraid to push the point or find a solicitor with a more pragmatic and progressive approach.
