A guide to litigation funding

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The costs of litigation can often act as a bar on parties bringing or defending proceedings. More than ever, it is necessary not only to consider the merits of bringing or defending a claim, but also the way in which that litigation is going to be funded.

At Ashfords, we offer a wide range of cost and funding structures to suit specific client and case needs. This article provides a useful guide to litigation funding, highlighting the many options available.

Hourly rates

Hourly rates are the traditional way litigation is funded. The time spent working on a case is recorded and charged for at an agreed hourly rate. Hourly rates vary depending on the seniority and experience of the lawyer working on your case. We are usually able to break down work into key stages and can accurate estimates for those stages to better help you budget. We will also ensure that work is carried out by the appropriate lawyer in the team to ensure that costs are controlled at all times. 

Fixed and capped fees

Many clients prefer the certainty of a fixed or capped fee. For certain types of claims, or for certain stages of litigation, we can provide fixed or capped costs budgets to help you better control legal expenditure.  

Certain types of litigation, which are currently between £10,000 and £100,000, are subject to what is known as the fixed recoverable costs regime. Under this system, you are entitled to recover fixed recoverable costs from your opponent if you successfully pursue a claim. For certain claim types, over £25,000, we are able to undertake the work at those fixed recoverable costs. The effect of this is that if you successfully pursue a claim and recover damages, you should recover all of your legal expenditure, making the claim cost neutral.  

Conditional fee agreements and discounted conditional fee agreement

Under a conditional fee agreement, you only pay legal fees in the event your claim is successful. If the claim succeeds, then our costs are uplifted by an agreed percentage, known as a success fee. Not all cases are suitable for a conditional fee agreement, but some which are not may still be suitable for a discounted conditional fee agreement. Under this type of arrangement, you pay a reduced hourly fee rate during the lifetime of the claim. If the claim is successful you pay the discount element and a success fee.

Damages based agreements

Under a damages based agreement, you pay nothing during the claim. However, you’ll pay an agreed percentage of any settlement agreed, or damages awarded, in lieu of our normal charges.

Third party funding 

Under this type of arrangement a third party funds the costs of litigation in return for a share of the damages if you’re successful. The third party funding market is growing rapidly and we are able to introduce you to funders and brokers who may be able to fund your litigation.

After the event insurance 

After the event insurance is a type of insurance cover, with insures against exposure to your opponent’s legal costs in the event that your claim is unsuccessful. Many policies are written, so that the premium is only payable in the event your claim is successful. After the event insurance is usually used along with the other funding options.

Before the event insurance/legal expenses insurance

Many businesses and individuals hold insurance cover which covers, or contributes towards, the costs of pursuing. Those policies usually entitle the policy holder to elect to appoint a solicitor of their choice meaning that the insurer will either fund, or partially fund the pursuit or defence of litigation. 

We have lawyers experienced in securing the use of such policies, ensuring that you are able to use the lawyer of your choosing wherever possible. For further details, please speak with Andrew Perkins or Anusheh Burcher.

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