March 5, 2020
The cost of funding litigation is often one of the major factors that parties involved in a dispute need to consider when deciding whether to pursue or defend a claim. The cost of litigation is two-fold: Your own costs; and the costs of your opponent (if you are unsuccessful).
The latter option is often overlooked. Although you need to remain buoyant about the prospects of success, it is important to adopt a clinical assessment of the prospects of your case, factoring in the inherent unpredictability of litigation generally speaking.
This article takes a brief look at the different litigation funding options and the different considerations to keep in mind when deciding which option to adopt for your case.
What funding options are out there to cover your own costs?
The main funding options that law firms in England and Wales have developed and are able to offer to provide assistance to clients are:
- Conditional Fee Arrangements: An agreement whereby the law firm’s fees and expenses are payable only in specified circumstances, usually a successful outcome in the case, often with a success fee on top of the firm’s usual fees.
- Discounted Conditional Fee Arrangements: An agreement whereby the law firm will be paid a discounted level of fees whatever the outcome of the proceedings, but will forgo the balance of its fees if the case is unsuccessful, and will recover its fees at a higher rate, with or without a success fee on top, if the case is successful
- Damages-based Arrangements: A form of ‘no-win-no-fee’ agreement which provides that the client will make a payment to the law firm only in specified circumstances – the amount of the payment will be determined as a percentage of the amount received by the client.
- Legal Expenses Insurance: A form of legal expenses insurance policy that provides cover for the legal costs incurred in the pursuit or defence of litigation or arbitration. This can be a policy that has been acquired before the dispute in question arises or it can be purchased afterwards (although in the latter case, it is usual for cover to be limited only to an opponent’s costs if the claim is not successful).
- Third Party Funding: A third party with no prior connection to the parties agrees to finance all or part of the legal costs in return for a fee payable from the proceeds recovered in the litigation.
Which funding option is appropriate for my case?
The different features of the funding options means that they are not all suitable to every case. We set out below some points to consider when deciding which option to adopt.
Conditional Fee Arrangements (“CFA”) |
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Damages Based Arrangements (“DBA”) |
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Insurance – Before the Event (“BTE”) |
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Insurance – After The Event (“ATE”) |
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Third Party Funding |
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How can we help?
Selecting the appropriate suite of funding options can be a critical factor in unlocking a prospective litigant’s ability to pursue or defend a claim.
Prosperity Law LLP adopts a commercial approach to litigation funding and, in appropriate circumstances, may be prepared to act on a conditional or contingent basis. We also have extensive experience in assisting clients to secure ATE policies and litigation funding.
For more information on how we can help you, please contact Andrew Farrell, Head of Litigation, at andrewfarrell@prosperitylaw.com or 0161 667 3686.