LITIGATION FUNDING IN 2014
CD: What major trends seem to be shaping the litigation funding market? How would you describe levels of demand for this funding in the past 12-18 months?
Smith: The major new English issue litigation funding issue has been the introduction of damages-based agreements (DBAs) for lawyers, meaning contingency fees. As of last year the success fee due under a DBA or under a conditional fee agreement (CFA) is payable by the winning party, typically out of recovered damages, whereas previously the CFA success fee was largely payable by the losing side. There has also been an overhaul of procedures and the introduction of costs budgeting principles. Further afield we have seen an increase in demand for litigation funding in international arbitration, together with an uptick in the assignment of claims before the courts of other EU jurisdictions, particularly in relation to damages following on from cartel activity.
Jarvis: The change in the rules regarding recoverability of After the Event (ATE) premiums and CFA uplifts has seen a change in dynamic for those products, except in the insolvency sphere where the hard-negotiated exception for insolvency cases remains until April 2015, when it will be reviewed. Further, there has been an increase in ATE providers asking for deposit premiums as well as purely deferred premiums – there is a sense that ATE insurers are looking at risk sharing with lawyers on CFAs rather than the case on its own merits. However, ATE insurance is a very useful product and there will always be a place for it even if the premiums are not recoverable from an opponent. As far as litigation funding is concerned, unsurprisingly, given the risks of litigation, it remains an expensive product and really suitable only for high value cases. We have used it successfully and have been very pleased with the funders that we have used. Equally, there is a real need for litigation funders to be better regulated and for some standardisation of funding agreements to develop.
Jul-Sep 2014 issue
Field Fisher Waterhouse LLP
Harbour Litigation Funding Ltd
Woodsford Litigation Funding