04 Jun — 21

Litigation Funding... what is it and why would you use it?

Litigation funding, also known as third-party funding is where someone who is not involved in the dispute provides money to a party to a dispute in exchange for an agreed return. The concept of litigation funding is really straight-forward. Here are some headlines to get you started :

- Funding will typically cover the funded party's legal fees and expenses. 

- The funder may also agree to pay your opponent's costs. 

- Funders don't typically fund cases that don't have an element of damages (money). This is because they get "paid" once a recovery of money is made.

- Funding is generally only available to claimants or defendants with a counter-claim. 

- Funders will look at the prospects of success of a case and will want to do their own analysis to be confident in funding. 

- Funders will look at whether your opponent can settle the claim on a win. 

So what are the advantages of using litigation funding : 

- litigation by it's very nature can be expensive and sometimes a claimant doesn't have the means to fund a genuine claim. It enables access to justice. 

- It allows claimants who do have the means to lay off some of the risk associated with upfront costs of proceedings. 

- It allows claimants to deploy their capital elsewhere. 

Of course there are disadvantages : 

- A claimant has to pay away a proportion of their damages to the funder 

- You may lose an element of autonomy over the case, particularly when it comes to settlement. A funder may want the right to approve settlement. 

- Substantial costs can be incurred in packaging a case to the funder and if the application for funding is unsuccessful the costs will be wasted. 

- Most funders only look at the really large cases for damages which prohibits the smaller cases from accessing funding. 

If you have a claim with good prospects of success it is definitely worth a conversation with your legal advisors to see if litigation funding might be suitable and available to you. 

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