Third Party Litigation Funding

There are now more litigation funding firms in England than anywhere else in the world!

Litigation funding, also known as litigation finance or third party funding, involves a third party providing financial resources to cover some or all of the costs and legal expenses associated with pursuing a claim. This arrangement is typically sought by claimants to cover disbursements and legal expenses under a funding agreement. The funding can also be used for specific costs such as ATE premiums (After The Event Insurance (ATE) Options in Birmingham & Northampton (witansolicitors.co.uk)), experts, outside counsel, or arbitration costs.

Third-party funding is usually provided on a non-recourse basis, meaning that if the claimant does not recover any damages, they are not required to repay the funder. However, if the claim is successful, the funder is entitled to a success fee, which is taken from the damages recovered, as per the terms of the funding agreement.

Many funders are members of the Association of Litigation Funders of England and Wales (ALF) (Association of Litigation Funders ), which administers a voluntary Code of Conduct. This code sets standards for funders, including requirements for capital adequacy and restrictions on funders' control over litigation.

Historically, litigation funding was considered unlawful under the doctrines of champerty and maintenance. However, these doctrines have evolved, and litigation funding is now recognised as a means to promote access to justice. Courts assess whether a funding agreement is champertous by considering factors such as the funder's control over the litigation and the return on investment.
Litigation funding is particularly useful in scenarios where claimants face significant financial risks, such as in insolvency cases. It allows claimants to pursue meritorious claims without bearing the full financial burden and risk of adverse costs. The funder will take on the financial risk of litigation, freeing up cash flow which covers you for the financial crunch it takes to pursue a legal remedy.

How can I access Litigation Funding?

At Witan Solicitors, we have access to several litigation funders via our appointed funding brokers. Several law firms are now able to assist clients with such arrangements and therefore it important to approach each law firm to understand whether your claim qualifies for funding and if so, what are the requirements before a funding application can be made.

In addition to third party funding, a party can explore several avenues, including retainer-based funding agreements such as ‘no win no fee’, and insurance policies such as before the event (BTE) or after the event (ATE) insurance.