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FAQ’s

So how is non-recourse funding different to ordinary commercial financing?

A traditional bank loan is a recourse. It requires a borrower to repay the loan, regardless of the outcome of a dispute. Banking institutions do not have the litigation expertise to underwrite the merits of a claim, so they ask for collateral or personal guarantees—whereas litigation funders see litigation rights as an asset that can be funded without collateral support. That’s how we can structure transactions as non-recourse investments.

Which cases are suitable for funding?

Commercial claims which are seeking a monetary outcome or an easily-liquidated asset (such as shares or real property) from a defendant who has the ability to pay. The case must be ‘economically viable’ for funding. This means that it must have a minimum 1:10 costs to award ratio. In other words, the total budget to run the case must be no more than 1/10 of the claim value. This is to ensure that the claimant will receive a worthwhile sum from the damages after the Litigation Funders reimbursement and success fee are paid.

Claim types include, but are not limited to:

Arbitration (domestic, international and bilateral investment treaty)

  • Class Actions
  • Commercial Litigation
  • Consumer Disputes
  • Competition
  • Financial Services
  • Infrastructure and Energy
  • Intellectual Property
  • Medical Negligence

Are there any case types that we will not consider?

At this time, we do not consider matrimonial or family law matters.

Funding does not require claimants to contribute towards their legal costs, however, we encourage contribution in some cases, as it may mean the client will get to keep a much more significant portion of the claim proceeds.

What about costs incurred before funding is approved?

Before we consider a dispute for funding, we require the merits to first be assessed by an attorney/solicitor and, possibly, an advocate/barrister. This means that some fees will necessarily be incurred prior to the completion of the funding agreement. There are several ways these fees can be met—the client can privately pay, the law firm can opt to defer these fees, or the firm can apply for early-stage funding to help with the initial costs of assessing the claim.

What role does the funder play in funded disputes?

The Funder will designate an attorney/solicitor from their Monitoring Team to keep in touch with the legal team and monitor the investment. Experienced litigation attorneys/solicitors, they can also be a valuable resource for the client and legal team during the course of the dispute. The legal team will be asked to complete a brief, monthly online questionnaire, provide the Funder with copies of the key correspondence and documents, and keep the Funder updated on the progress of the claim, and provide copies of all of the invoices, so the Funder can track the budget.

What happens if the initial budget is not adequate to run the claim to conclusion?

The legal team will work with the Funder to set a budget for a claim at the outset, and while we encourage claimants and legal teams to do their best to work to the budget, we recognise that this is not always possible. Where a variation is required, we must be advised and the variation and increase in funding will be approved by the Funder if feasible.

Once a case is funded, does the funder have control over the case?

The Funder does not have control over the case, and the Funder does not have the right to make the claimant accept or decline a settlement offer. The claimant will retain ultimate control of their dispute. The Funder will require claimants to act reasonably, in considering whether to reject or accept offers. As such, the Funder does require the claimant to take advice from their attorneys/solicitors, and/or an advocate/barrister, on whether a settlement is reasonable.

What happens if a funded case is unsuccessful?

Provided the claimant has complied with the funding agreement, they will not be liable to repay the funds that the Funder has advanced to cover the costs of the matter, though any of the funds remaining in the law firm’s client account must be returned to the Funder.

If the matter is unsuccessful, does the claimant or law firm have any liability to the funder?

In relation to the Funder, no—funding is provided on a non-recourse basis, which means that if the case loses and the claimant has complied with their obligations under the funding agreement, then they do not have to repay the funded amount.

What happens when a funded case concludes successfully?

Where a funded claim is settled or wins at trial, the proceeds of the claim will be distributed in the priority order set out in the funding agreement. In general, the Funder is first reimbursed and paid their success fee, any other liabilities the client may have will be paid, and then the claimant will keep the remainder.

What is the funders average success fee?

Funders' success fees are set on a case by case basis, taking the individual risks and merits of each claim into account. The Funders success fee is calculated as the greater of either a multiple of the funds released or a percentage of the damages and costs recovered.

What happens during the funders due diligence process?

  • The facts of the case are verified and the potential legal arguments of the case are assessed.
  • The legal and ethical rules in the jurisdiction are confirmed, with respect to litigation finance, to ensure that the deal can be completed.
  • The appointed judge’s past rulings in the case are looked at, as well as the outcome of similar cases that were tried or settled in the same jurisdiction, and the track record of the opponent’s legal team.
  • The litigation history and solvency of the defendant are assessed, determining the defendant's ability to pay, and whether there are any other large pending lawsuits, government investigations, business issues that could precipitate an insolvency proceeding, or other factors that may undermine the defendant’s ability to satisfy a judgement.
  • Financial models are built, on the various potential outcomes, the required budget and the time horizon of the case, to understand how they might affect the recovery and return of the investment.
  • Outside experts may be consulted, as necessary, from the Funders network, and at their expense.

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