Even in a relatively straightforward claim by one party against another, the order of distribution priorities under a funding investment agreement following a settlement can be complex. Where the claim itself involves multiple parties – either multiple claimants, multiple defendants or multiple claimants bringing claims against multiple defendants – those complexities can increase exponentially.

In any multi-party funded litigation, the most desirable form of settlement is, self-evidently, a global settlement resolving all claims against all defendants. However, given the individual motivations of each party, this can also be an unlikely scenario. Bilateral settlements raise a number of issues for funders and funded parties alike, which need to be considered in detail when the investment agreement is entered into.

Success and priorities of payments

‘Success’ in the context of a funding investment agreement will commonly refer to any judgment or settlement of the claim, pursuant to which any party is required or agrees to pay any amount (including non-pecuniary benefits) in respect of the claim. However, ‘success’ may not necessarily result in a judgment or settlement amount which is sufficient to satisfy every party with an interest in the recovery from the proceedings.

Jul-Sep 2018 issue

Hausfeld & Co LLP