Litigation, especially in the corporate field, has always been a costly activity. It is risk-riddled and pursuing claims for millions of pounds is a timely endeavour. In some cases, it can take several years to reach a verdict; that’s a long time to cover all the legal fees when there is the chance the case can flop.
Given present day economy, it is no surprise to hear that many businesses are sidestepping going to court, even when they have a strong case. The prospect is expensive and many in-house counsels choose not to risk tying up the cash flow.
Third party litigation funding was once an illegal, mistrusted practice but nowadays, more and more businesses are turning to independent funders to help with the costs of litigation. FTSE 100 companies and global businesses are consulting third party funding firms, like Vannin Capital, to fund their cases and spread the risks.
It has now become a respectable method of funding legal costs and achieving justice. As with most things in life, money unfortunately is at the heart of litigation and it always will be. It costs money to take a case to court and pay all the legal fees; and sadly money doesn’t grow on trees.
However, a judicial review by Lord Justice Jackson has led to the recent reforms of legal costs, with the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO). The new law will hopefully give clients clarity on funding costs, give funding providers clear guidelines to follow, and encourage good practice within the industry.
As part of the reforms, cost budgeting at the start and during a trial has become compulsory, and After-the-Event Insurance (ATI) remains vital. Damage-Based Agreements (DBAs) have replaced Conditional Fee Agreements (CFAs) and will very much be a ‘wait and see’ component.
What else has changed? The industry has become self-regulated. The Association of Litigation Funders of England and Wales (ALF) was set up in 2011 and all members are fully vetted. They must follow a strict code of practice which ensures that they do not run out of money half way through a trial, or unduly interfere in the running of a case.
However, it must be noted that not all litigation funders in the UK have become affiliated, so we strongly advise you to only use a reputable member.
Overall, commercial litigation has evolved with the times and arguably, for the better. In this day and age, no credible funder will take your case on board if it is not likely to succeed which gives businesses and solicitors self-assurance when pursuing a claim.
As the economy fluctuates, it can only be predicted that more changes will come. However, one thing in the industry remains the same; commercial litigation funding via a third party provider will certainly give you the security that you need to take a case to court.
This article was written on behalf of Vannin Capital, leading specialists in litigation funding. The team has experience in cases from the jurisdictions of England and Wales, the EU, the Caribbean and international arbitration matters. Visit litigationfunding.com today to learn more.