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.