When faced with a legal claim, one of the key consideration for any potential party, is how the legal action will be funded. Legal claims are expensive, the time for resolution of the claim is often unpredictable as can be the outcome. A potential party to litigation also needs to consider the risk that they are ordered to pay a financial sum to their opponent or their opponent’s legal fees.
Legal costs are most commonly funded by clients paying for their Solicitor’s time. Law firms will ask for their clients to make payment on account of their costs and this regular monthly payment for legal services (which can range from a matter of weeks but more usually months or years) is often onerous, particularly for small businesses and individuals. This option can present material cash flow difficulties for a party to litigation and strategically limit the options available – for example, by stopping the claim altogether or by forcing settlement discussions at a much lower financial level because of the inability to fund ongoing litigation.
Taking early advice surrounding alternative funding options is crucial for any potential party to a dispute. It is accepted that every case is different however, clients are often encouraged to use the same funding option (paying their Solicitor monthly based on time incurred). This “one size fits all” model does not work and early advice on alternative options is key to maximise return and / or reduce financial exposure.
Alternative Funding Arrangements
Francis Wilks & Jones are used to advising potential litigants of available alternative funding options. These may include:
- Conditional Fee Agreements
- Damages Based Agreements
- Funding based on Blended Rates
- Fixed Fee Retainers
- Third Party Funding
- Litigation Funding
- Assignment of your claim
- After the Event Insurance
Early consideration of alternative funding arrangements can directly impact the strategy for your case, the direction of your claim, the stage at which settlement is likely and the amount of any settlement award. We will work with you to identify the options available for funding your case so that you can make an informed decision at the outset.
Litigation Funding is the financial arrangement by which a law firm’s client makes arrangements to pay the law firm’s fees, in circumstances where they cannot pay such fees up front.
The litigation funding arrangements are usually entered into between the solicitor and the client directly, where they agree a circumstance in which the solicitor’s fees will become payable (usually at the successful conclusion of the instruction). Examples of litigation funding include Conditional Fee Agreements and Damages Based Agreements.
Where you have a potential claim and are looking for litigation funding, we would be happy to assess whether we could fund your claim for example, via a Conditional Fee Agreement or Damages Based Agreement. To do so, we would need to understand your claim, its legal basis, its financial value, the chances of success against your opponent, whether your claim is out of time (under the Limitation Act 1980) and also, whether your opponent is able to pay any Judgment awarded and costs.
Third Party Funding
Third Party Funders are funding institutions that provide access to finance for potential litigants to legal action. The funding will often fund all Solicitors’ costs and disbursements associated with legal action. However, alternative models also exist (e.g. those that provide funding for disbursements only).
These funders tend to be supported by investors and will work in a similar way to any private funding institution; the main purpose of the funding being for the Third Party Funder to obtain a profitable return on their investment.
In the main, third party funding is used by Claimants to a legal action however it can also extend to the defence of claims and even out of court non-contentious negotiations where legal assistance needs to be funded.
We work with a network of Third Party Funders and can assist by introducing you to a funder who may be prepared to fund any legal claim you may have. A funder would need to understand your claim, its legal basis, its financial value, the chances of success against your opponent, whether your claim is out of time (under the Limitation Act 1980) and also, whether your opponent is able to pay any Judgment awarded and costs.
At Francis Wilks & Jones, we are fully aware of the options available for funding litigation and will work with you to assess the most appropriate funding model for your case. We would be happy to speak to you about your legal claim.