A simple Google search highlights the extent and growth of the litigation funding marketplace with each company vying for your custom. Burford Capital is the latest example of a large litigation financer entering the English market by announcing a £30m investment into a FTSE20 company. They have also more recently been granted a licence to set up an alternative business structure with a view of setting up its own law firm.
This sort of financing of litigation began in Australia over ten years ago, but since has become popular in England and Wales following the practice being backed by the Ministry of Justice.
Litigation funding by a third party is the easiest form of litigation financing to understand. In its simplest form investors put up the funds for you to bring a case and in return they receive a share of the damages / settlement you receive.
For SMEs the advantages of this funding practice is evidently clear. SMEs resources / cash is very tight and litigation is often an unbudgeted / unnecessary burden that they must over come. Therefore the impact that litigation can have upon you as an SME can be diluted with the use of a litigation funder and the burdens imposed by litigation passed to us.
For larger companies, the need for third party funding is less of a financial impact and more to do with the issues of risk / company priorities. Litigation is a time burdensome process, despite having a strong case large companies may see the risk / time pressures of litigation as a greater impact than the financial remedy they are seeking to recover. Therefore with litigation funding large companies may seek to commence litigation without the time pressures of pursuing the dispute themselves or the financial burdens in paying legal fees – the benefit that you receive from this is paid for by surrendering a percentage of any damages / settlement you receive.
Stephensons has a portfolio of litigation funders who work with on a regular basis. We are best placed to explore the various options out there to help and support you through the litigation process.
If you need any further information regarding this process please contact Alistair Gregory, a Partner and specialist in litigation, on 01616 966 229