Litigation Funding Firms

Litigation Funding Firms 

Litigation funding firms are businesses that have been created to provide third party financial assistance to claimants, usually other businesses, but can also be individual claimants on some occasions. These financial resources are deployed to enable the claimant’s litigation case to proceed, as otherwise the claimant could not afford to get the legal case off the ground and seek financial recompense from the defendant.

 

Clearly, these businesses do not provide their capital free of charge, and so claimants who use their services and funds can expect to pay various fees and charges. These fees can appear high on the face of it, but most third-party litigation funding firms provide non-recourse finance, which means if they provide the funds for your legal action which ultimately fails, they lose all their investment, often running into many hundreds of thousands of pounds, and sometimes even millions of pounds.

 

The claimant usually requires funds to finance or part finance its proposed legal costs for the dispute in question. This may involve paying the law firms costs, the legal disbursements of the case, court fees, ATE insurance premium, or a combination of any of them. It should be noted that even though litigation funding firms provide the funds to run the legal case, they are not permitted to run the action themselves or direct how the case in run. They should have no direct interest in the proceedings, other than the ultimate outcome. In the UK litigation funders must not get involved in settlement discussions or cause the claimants solicitors to act in breach of their professional duties.

 

As noted above, if the outcome of the case is unsuccessful, then the funder will lose all their investment. However, if the ultimate outcome of the legal action is successful, then this is where the litigation funding firms get to share the spoils of the award or damages.

 

The fees and charges can vary quite significantly from firm to firm and case to case, but in general, litigation funding firms will want two main returns on their investment.

 

1. They will want an x times return on the capital deployed, such as 2x, 3x or 4x. Meaning if the claimant used £100,000 of funds, and the fee was 3x, then the fee would be £300,000 for the use of that capital.

2. Secondly, there will also be a share of the award as a sort of success fee. This can range from 5% to 50%, with most ranges being between 10%-30%, again depending on the type of case and size of the potential award. 

 

Litigation funding is permitted under statute, case law and public policy in the United Kingdom and other jurisdictions. The industry has grown rapidly in recent years, and there are now a significant number of third-party litigation funders to choose from.

 

LITIGATION FUNDING FIRMS DIRECTORY

The directory below contains a selection of reputable litigation funding firms that should be considered for further discussion and due diligence if you or your client is seeking a litigation funding partner.

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