The market for litigation funding has changed significantly in the last 12-24 months. An influx of cash-rich investors and purchasers of one-off pieces of litigation have helped to create a highly competitive market for litigation funding. New products are appearing weekly and the legal profession is finally starting to engage seriously with funding as a way to monetise claims or completely de-risk litigation.
We have spent 12 months meeting with clients, funders, brokers and insurers — sharing our views on how to shape the market and what we at Eversheds Sutherland want to develop for the benefit of our clients. In this guide, we examine some of the new funding models available in the market, as well as looking at alternative fee arrangements which enable us to work in true partnership with our clients.
Harbour Litigation Funding
We are collaborating with one of the largest global funders, Harbour Litigation Funding to offer clients direct access to litigation funding, but still leaving the client in control of the conduct of the litigation and removing the associated financial risk. Further, by putting lower value or riskier claims into a portfolio, we are able to secure funding for claims which previously, or as a standalone, may not have passed a funder’s due diligence process.
For more information on our Harbour collaboration, please download our Harbour/Eversheds Sutherland brochure.
Our clients tell us that they want
- greater certainty and predictability in respect of litigation costs
- innovative solutions which go beyond discounted hourly rates
- fees linked to service delivery rather than just hours on the clock
- a sharing of risk and reward, so their lawyers have “skin in the game”
- a better understanding of how they can mitigate against potential liability for an opponent's costs
- solutions that ensure litigation costs don't become a blocker for other projects or capital expenditure
Benefits
Looking at litigation funding in new and innovative ways has a multitude of benefits for clients. From completely de–risking litigation, to taking claims off balance–sheet, aligning your lawyers' interests with your own and even turning claims into revenue generating streams, there is now a funding model to achieve almost any client objective. Download a copy of our interactive guide now to find out more.
Risk free litigationLeveraging third party capital in return for a share of the proceeds of a win enables parties to pursue litigation without any risk.
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Cost free litigationIn exchange for a share of the proceeds of a successful outcome, third party financing can enable claimants to pursue litigation without any up-front financial outlay.
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Cost management and risk allocationFunding can help claimants to manage or cap financial exposure to litigation by offering full or partial investment.
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Funding a portion of fees/expensesFor clients who are prepared to share risk and reward, as opposed to a complete off-book solution, payment of part of our fees as the matter progresses, reduces the level of funding required, and thus, reduces the amount which needs to be paid to a funder at the conclusion.
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Third party validationIn order to obtain funding, an investor will usually require a detailed due diligence phase which assesses the merits of your case.
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Off balance sheet litigation for claimantsWinning a piece of litigation can bring significant revenue into a business.
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Balance sheet preservation for defendantsFinancing is not just for claimants. Funding can help a defendant to protect its balance sheet – by paying a funder an agreed sum to assume all or some of the liabilities of a case.
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Risk sharingNewer funding models can be utilised alongside alternative fee structures which move away from hourly rates to align the interests of funders, lawyers and clients.
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Funding options
From third party funding to conditional fee agreements, there are now a multitude of options available to clients. We have highlighted some of these below but please download a copy of our full funding guide now for more information.
Alternative Fee Arrangements (AFA)An AFA is any legal fee structure or method of charging for our services other than standard hourly rates. Here are some examples.
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Conditional Fee Agreement (CFA)An agreement which provides for the payment of fees, in part or in whole, depending on the outcome of the dispute.
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Third Party Funding (TPF)TPF involves a specialist litigation funder paying a claimant’s legal costs in return for a share of the damages or a multiple of investment if the claim succeeds.
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Damages Based Agreement (DBA)A US-style contingency agreement which is now available in England and Wales. A DBA provides for payment of the law firm’s fees only on recovery of damages, and is expressed as a percentage of the amount recovered.
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After the Event Insurance (ATE)An insurance policy purchased during the course of litigation to guard against payment of the other side’s costs at the conclusion.
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At Eversheds Sutherland we recognise that the costs of litigation (and disputes more generally) can be an unwelcome burden for many of our clients. Unlike commercial projects or transactional work, litigation is often uncertain in terms of duration, direction and outcome. This means that even the most carefully scoped estimates can sometimes be subject to change. The potential legal costs of protracted litigation can occasionally be a deterrent to bringing or defending legal proceedings even where there is a good chance of succeeding.
Head of Costs and Litigation Funding
Contact us
To find out more about litigation funding and Total Dispute Finance, please contact:
Últimas Alertas Informativas
- guides and reportsGlobal Guide to Litigation Funding