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Commercial litigation funding

Resolving a commercial dispute can be expensive, complex and carry uncertainty. Our commercial litigation solicitors able to help clients achieve the best result, managing the process with care and control.

With recent changes in the law concerning litigation funding, our team is often asked about securing alternative funding. We are experts in assessing individual client needs to provide a comprehensive service, providing an in depth understanding of risk and cost. Furthermore, where we agree that you have a good case, we will share the risk with you.

Our pragmatic and business-like approach, allows clients to fully appreciate risk before entering into litigation or dispute resolution. To speak to a member of the litigation funding team call us on 01616 966 229.

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Litigation funding - Q & A guide

What is litigation funding?

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.

Who are the litigation funders?

The funder is a party that has not involvement with the dispute. They usually are investors, private equity funds, hedge funds and private investors. There has recently been an influx of specialised litigation funders entering the market to funds high value litigation.

Who can use litigation funding?

Anyone. Litigation funders do usually limit the financing to claims that are valued in excess of £250,000. Many funders out there are now looking at claims significantly lower given the upsurge in popularity / return in these types of financing arrangements.

Will I get funding for any claim?

Unfortunately not. Funders see the payment of your legal fees as an investment and therefore want to see a reasonable rate of return. Much the same way as any legal expense insurance policy you must have reasonable prospects of successfully bringing and/or defending a claim.

How long will a decision take?

Usually from you first approaching Stephensons to submitting your application and receiving a decision will take up to 2 weeks, if not much sooner. However the funder will undertake their own due diligence into the dispute which may increase this time.

Will I have to pay any legal fees myself?

From the point a litigation funder is accepted then all the legal fees will usually be paid by them. In certain circumstances (usually down to the prospects of a case) a funder will ask you to pay a proportion of your legal fees (sometime a small percentage) which limits both their exposure and also any damages that you may have to pay back to them.

What is the usual share of damages that the funder will recover?

Funders have traditionally looked for a return of between 4:1 - 10:1 but this is changing in favour of litigants and depends on the size of the dispute / risk involved in the litigation. We can however help you negotiate between the expected damages in a case and the legal costs.

Does the funder control the litigation?

No, a funder will not have any rights to control the litigation or force you into accepting a settlement proposal. The law relating to this is very clear.

Will the funder pay the legal fees I have already incurred?

Not typically, however on occasions if presented with the right case / investment they can be persuaded to pay for costs incurred.

Will the funder take on my case if it has already started?

Yes, but it is usually in your best interests to apply sooner rather than later.

Must my funded case proceed to trial?

No, settlement is solely a decision for you to make although naturally, the funders do like to see the cases settled as quickly as possible.

If my case is unsuccessful, will I have to repay the funder?

No, a funder will only be paid if there are successful. You may however be required to pay a proportion of your opponents legal costs depending on the deal you have with the funder.

If you need any further information on issues relating to litigation funding please contact our specialist solicitors on 01616 966 229.

Our litigation funding experience

Stephensons acted on behalf of Insolvency Practitioners - TH Associates - to help pursue a substantial claim on behalf of creditors. Jonathan Taylor of TH Associates had been appointed as liquidator of the insolvent company.

Not wishing to put the limited creditors funds at risk, yet knowing the claim had to be pursued in their best interests, TH Associates explored litigation funding with Stephensons. 

All options were considered by Stephensons, in detail, to progress the claim. Following consultation with the client, Stephensons oversaw the assignment of the claim to a litigation funder, negotiated terms and then pursued the claim to settlement.  This guaranteed that the creditors funds would be secure and the risks were passed to the litigation funder resulting in a dividend to the creditors.

Jonathan Taylor from TH Associates, said “I was delighted with the way in which Stephensons helped us through a complex and time consuming case of litigation funding. We were very satisfied with the outcome which exceeded our expectations.

“Nicola Whittle and the team demonstrated an acute knowledge and understanding of alternative funding options and were thorough and attentive in the service they provided. I would not hesitate in recommending Stephensons.”

Stephensons acted on behalf of a client who was pursuing significant financial losses as a result of a complex and costly breach of contract claim.

In order to negate financial risk, the client was exploring various litigation funding solutions.

Using established contacts within the litigation funding sector, Stephensons liaised with a market leading litigation funding provider, and secured essential funding in circumstances where time and funds available were limited.

Partner and commercial solicitor, Alistair Gregory, managed the process throughout, working alongside the client and barrister to promote an integrated approach. The assistance, expertise provided resulted in a successful application and a six figure sum of funding was secured, allowing the case to proceed.

Stephensons acted on behalf of Alan Coleman of Royce Peeling Green Limited (RPG) in his capacity as liquidator of an insolvent company to recover a substantial asset on behalf of creditors that had been transferred from the company by to associated companies in breach of the Insolvency Act 1986

It was critically important to the creditors that the claim was to be pursued as this was the only asset in the liquidation. The complex factual matrix coupled with insufficient assets in the estate meant that alternative funding was needed to pursue the claim.  

Stephensons worked through the many options in detail to progress the claim and guided Mr Coleman to the right solution. For Mr Coleman, the route to pursue the claim was through a Conditional Fee Agreement supported with an after the event policy. Stephensons managed the process and put all the necessary documents in place for Mr Coleman to secure the funding and insurance. Without the funding being in place the claim would never have been pursued and we would never have achieved the court’s judgment which the creditors deserved.

Mr Coleman of RPG said “I was very pleased with how smooth Stephensons made the process of arranging the conditional fee agreement and after the event insurance. Without Stephensons’ help we would have never been in a position to press ahead with the claim and I would not hesitate in recommending Stephensons." 

Litigation funding solutions

Condition fee agreements (CFA) (‘no win no fee’ agreement)

This is where a claim is pursued on a ‘no win no fee’ basis. Stephensons would assume the costs risk if the claim fails. The level of success fee/uplift can vary and the CFA can be either fully or part funded by our clients. A partial CFA means that you or a third party funder pay a portion of the costs -the remaining costs risk is shared by Stephensons.

Contingency fee agreement / damages based agreement

Since April 2014, Stephensons is able  to enter into an agreement with our clients whereby they agree to pay a percentage share of the damages when they win, should they be successful.

Fixed fees

Stephensons is committed to providing affordable legal solutions across all our services. Instead of charging an hourly rate, in many cases, we are able to offer fixed fee legal services.  Furthermore, where we can fix or ‘cap’ the fees to a preagreed level, giving certainty and control back to the client, we will.

After the event insurance (ATE)

If you have ATE in place, and you lose the case, the insurer will step in to cover opponents cost and expenses awarded against you. We have worked with many ATE providers and can help you to secure the right cover for you.

Before the event insurance (BTE)

BTE policies are usually ‘add ons’ to insurance policies and provide cover for limited types of disputes. Most policies indemnify the case as long as it has reasonable prospects of success. BTE insurers can limit your choice of solicitor, however, Stephensons work with leading BTE providers so if you benefit from a BTE policy and have a good case we should be able to help.

Third party litigation funding

This funding option involves the introduction of a third party to the case. The third party will agree to finance all or part of the litigation costs in return for a share of the proceeds. If a claim is lost, the funder bears the costs so there is nothing to be repaid.

Stephensons has seen the popularity of this method of funding increase in recent years and we have invested significant resources into this area. Stephensons has forged relationships with leading insurers and funders and see that this facility as genuine step forward for clients.

Stephensons acts for both large national businesses and small to medium size companies. Establishing suitable funding is just part of the support we will provide you with whilst we handle your dispute. We realise litigation can provide unwanted pressure and we aim to reduce this allowing you to concentrate on your business and ‘ring fence’ the risk involved in litigation.

To speak to a member of our commercial litigation team call us on 01616 966 229, alternatively please complete an online enquiry form and we will contact you directly.

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