Legal Funding

As an ever-growing number of businesses, organisations and individuals are turning to third party legal funding for their litigation. This post will explore a selection of potential forms of funding that you may wish to consider in defending or pursuing legal action.

Insurance

Insurance is a very effective way to fund litigation. With certainty of what your financial losses are, it may even cover the liability for your opponent’s legal costs.

Public and employer’s liability insurance may also cover legal costs as part of the policy.

The two most popular forms of insurance for prospective litigators are Before-the-Event and After-the-Event insurances.

Before-the-Event

Before-the-Event insurance policies are taken out before an event occurs which gives rise to legal proceedings. This is a pre-emptive measure which offers peace of mind and is worth considering in the usual course of business. While (it is hoped) you may never need to use it, money may be saved in the long-term as the premium payments are assessed in a different manner.

After-the-Event

After-the-Event insurance covers the costs that arise in the pursuit of defence of litigation and is purchased after the legal dispute has arisen. This form of insurance is widely used in both Civil and Commercial matters. This policy offers you certainty of the maximum losses you are likely to incur. The premiums are indexed to the insurer’s financial risk which meaning; as the dispute gets closer to trial and premiums start to increase the incentive on the parties grows to settle. After-the-Event insurance can also be used to fund expert witnesses which may not be included in the Before-The-Event policy.

Litigation Funders

A litigation funder will offer to fund all or part of your litigation in exchange for a share in the compensation or indemnity which the Claimant is looking to pursue at trial. The litigation funder takes the risk of investing their money in your matter and therefore bears the brunt of the loss should you lose. Consequently, a litigation funder is only likely to back legal action if the prospect of success and potential return is high. The prospect of success is also likely to determine the percentage of the monies they ask for in return.

If you wish to explore options for litigation funding, please contact us.

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