The Sundry questions over Litigation Funding

Did you know that an old saying that ‘actions speak louder than words’ also holds true for initiating a civil proceedings? In the legal world when all informal attempts at resolution of a dispute fail, formal action starts by issuing and serving a claim form. However, the financial souci over cost of such an endeavor often holds back even the most genuine claimant from venturing into it. Litigation is now synonymous with lucrative business and commercial players are eagerly funding litigation actions in return for a share of the winnings! This article will bring a big relief to those readers who are not eligible for public funding more commonly known as “Community Legal Service” granted by the Legal Services Commission. When bringing a civil claim some of the possible funding options are: Traditional Approach: The client agrees to pay their solicitors costs at an agreed hourly rate. Benefit of legal expenses insurance: often as a part of home insurance policies, the costs will be met by the legal expense insurer. It would be a good idea to check your insurance policies to see if you do have legal expenses covered. ATE : After the Event Insurance can be taken out to cover your opponent’s costs in the event you lose your case because the usual court rule in civil proceedings is that the unsuccessful party will be ordered to pay costs liability of the successful party; CFA : Conditional fee agreements under which a solicitor may agree that the client will be liable to pay his legal costs if the claim is successful and in return for this if the client wins the solicitor will be entitled to charge his usual rate plus a success fee calculated as a percentage uplift on his usual costs (but the uplift cannot be more than 100% of his usual costs). It is not uncommon to find clients take out ATE with CFA funded claims. In the event the client wins and is awarded costs he is usually entitled to claim both the uplift costs and the insurance premium paid on taking out ATE. A question that the readers are by now surely asking themselves is then how are commercial players getting a piece of the action? The answer is from third party funding. This is an arrangement where a third party (either an individual or a company) will assess the merits of your case and agrees to fund a court case on your behalf in return for a slice of the winnings. If the case fails, the third party funder loses the money put into the case. It is very much a game of chance and third party funders tend to prefer commercial disputes as they are most rewarding. By Sundeep Oberoji of SNV Solicitors