Litigation funding

Litigation funding, also known as legal financing and third-party funding, enables a party to litigate or arbitrate without having to pay for it, whether because they are unable to pay for it or because they do not want to. A third party professional funder can pay some or all of the costs/expenses associated with a dispute in return for a share of the proceeds of the dispute if it is successful. If the litigation is not successful, the funder bears the costs it has agreed to fund.

Litigation funding has two major divisions: consumer financing, commonly referred to as pre-settlement funding or plaintiff advances, and commercial financing. Consumer financing generally consists of small advances between $500 and $2000. Prominent consumer financing companies include LawCash, Oasis Financial, and RD Legal Funding. Commercial financing for companies to pursue legal claims generally is dedicated towards payment of attorney fees and litigation costs.

Various new websites are also promoting the use of litigation crowdfunding, in which case hundreds or tens of thousands of individuals can help to pay for a legal dispute, either investing in a case in return for part of a contingent fee, or offering donations to support a legal right that they believe in.

Litigation funding can be broadly split into 4 different forms in the UK, Conditional fee agreements, Damages Based Agreements, Fixed Fees and Third Party Funding.

Litigation funding is not a new concept. It has been permitted in England and Wales since 1967, but until relatively recently it was limited to insolvency situations. Litigation funding's journey from its prohibition in Ancient Greece to its present-day status as ‘the life-blood of the justice system’ were all covered in Lord Neuberger of Abbotsbury's lecture at Harbour's inaugural keynote address, ‘From Barretry, Maintenance & Champerty to Litigation Funding’ at Gray’s Inn, London, on 8 May 2013.Lord Neuberger is President of the UK Supreme Court.

Selected key judgments relating to Litigation Funding, handed down by the Courts of England & Wales, are summarised below as well as key policy and regulatory developments.

2016

Charge Injection Technologies (CIT) v DuPont

Court Rejects Challenge to Litigation Funding Arrangement

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