Pursuing a civil claim can be very expensive before you even get to the stage where you might get any money back from your opponent. This is where Litigation Funding can come in and pay the costs of a claim for the Claimant, via a third party funder.
Checking Whether Your Case Qualifies
Funders have their own criteria for deciding on cases to fund. As a rough rule of thumb this would be a claim worth £250,000 to £500,000 or more in likely damages, a strong merits case (60% or better) and a defendant with means to pay the claim. Cases that are clearly speculative or against insolvent parties are generally not considered.
Approaching a Funder
The process of approaching a funder for a case typically begins with submitting a case summary, together with key documents and a Counsel’s opinion as to the prospects of success. The funder will then go through a process of due diligence on the case, reviewing the available evidence, the legal arguments and expected time frame for the litigation to resolve. This can take anything up to several weeks.
What the Funding Agreement Covers
A funding agreement sets out what the funder will pay in terms of legal fees and costs of counsel as well as the outlays for filing at court and other associated disbursements. A further common feature is for the funder’s costs to be covered by an adverse costs insurance policy and for these too to be included in the agreement. Understanding civil procedure and the associated costs as well as the case management of the action are vital to understand the outlays incurred by the claimant throughout the action.
How the Funder’s Return Is Calculated
Litigation funding is non-recourse. This means that if the claim loses, the funder will not seek to recover their money. However, if the claim wins, the funder will look to recover their return. This return is typically either a multiple of the capital advanced by the funder (commonly 2x to 3x the amount advanced) or a percentage of the damages recovered by the claimant (often 20% to 35% of the damages recovered by the claimant, whichever is the higher).
What Happens at Settlement or Judgment
In summary, the court-ordered costs of the other party are repaid first, then the litigation funder is repaid in full in accordance with the terms of the funding agreement, and the remainder is paid to the claimant in full. This is the case for all Litigation Funding whether in London or elsewhere and whether the claim settles early or proceeds to a full trial. For Litigation Funding London, see https://www.novo-modo.co.uk/litigation-funding-london.
Knowing what each stage of a litigation funding agreement entails is half the battle of entering into funding agreements.
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