Collective proceedings and group actions are often driven by legal principle, commercial pressure and litigation funding. But they are also driven by costs.
The costs and funding structure may determine whether the claim can be brought, whether it can be certified, whether it can withstand an application for security for costs, whether adverse costs risk is properly managed, whether the funder’s return is acceptable, and whether settlement produces a workable outcome for the class, group, funder, solicitors and insurers.
In group litigation, costs are not an afterthought. They are part of the architecture of the case.
I advise and appear in costs and funding disputes arising in collective proceedings, group actions, representative claims, test cases and other multi-party litigation. I am commonly instructed where the costs issue affects the wider strategy, viability or economics of the litigation.
Why these cases require specialist costs advice
Group litigation is different from ordinary bilateral litigation. The sums may be large, the parties numerous, the funding structure complex, and the costs risk asymmetric. A decision made early about funding, budgeting, ATE insurance, adverse costs, common costs or individual costs may have consequences years later.
The costs questions may include:
Who is responsible for common costs?
How are individual costs to be treated?
What happens if the claim fails?
Is there adequate ATE insurance?
Can the defendant obtain security for costs?
What is the funder’s exposure?
What costs are recoverable from the opponent?
What costs can be deducted from damages or settlement proceeds?
What happens if there are competing claimant groups?
How should costs be dealt with at certification, settlement or discontinuance?
These are not merely technical questions. They affect the commercial reality of the case.
When I am instructed
I am commonly instructed where collective or group litigation raises issues about:
- Collective proceedings in the Competition Appeal Tribunal;
- Group Litigation Orders;
- Representative actions;
- Test cases;
- Multi-party commercial claims;
- Funding agreements;
- CFAs and DBAs;
- ATE insurance;
- Security for costs;
- Adverse costs exposure;
- Funder control and non-party costs risk;
- Costs budgeting and costs management;
- Common costs and individual costs;
- Costs sharing arrangements;
- Solicitor and own client costs;
- Deductions from damages;
- Settlement approval and settlement distribution;
- Competing claimant teams;
- Failed or discontinued group claims;
- Costs appeals.
These issues may arise at the start of the case, at certification, during case management, on security for costs, on settlement, after judgment, on detailed assessment or on appeal.
Collective proceedings
Collective proceedings often involve a particular combination of funding, scale and adverse costs risk.
At the certification stage, the proposed class representative must usually show that the claim is properly constituted and capable of being conducted fairly and effectively. Costs and funding may be central to that assessment. The tribunal may need to understand how the litigation will be funded, how adverse costs risk will be met, what role the funder plays, what ATE insurance is in place, and whether the arrangements are adequate for the case proposed.
For defendants, funding and costs may provide important pressure points. A challenge to the adequacy of the funding arrangements, ATE cover, security position or proposed costs structure may affect whether the claim can proceed, and on what terms.
For claimant teams and funders, the task is to ensure that the costs and funding structure is coherent, defensible and capable of surviving scrutiny.
I advise on costs and funding issues in collective proceedings, including certification, funding challenges, security for costs, adverse costs risk, settlement and non-party exposure.
Group Litigation Orders
In GLO cases, costs issues can become complicated because there may be common costs, individual costs, lead solicitors, individual claimant firms, test cases, generic issues, individual issues and different groups of claimants at different stages.
A GLO costs structure should be considered carefully from the outset. If it is not, disputes may arise later about who bears common costs, how costs should be apportioned, how budgets should be prepared, what happens to claimants who join late or leave early, and what deductions may be made from damages.
I advise on costs issues in GLO litigation, including budgeting, costs sharing, adverse costs, settlement, deductions, assessment and disputes between solicitors, claimants, funders and opponents.
Funding and ATE insurance
Most substantial group claims require funding. That may involve third-party litigation funding, CFAs, DBAs, ATE insurance, costs sharing arrangements, or a combination of them.
The documents need to work together. A funding agreement which assumes one thing, a retainer which provides another, and an ATE policy which responds to something else may create serious problems later.
The key questions are practical:
Is the funding adequate?
Is adverse costs risk properly covered?
Is the ATE insurance sufficient to resist security for costs?
Is the funder’s return clear?
What happens if the case settles early?
What happens if the case fails?
What happens if the funder terminates?
Who is paid first from any recovery?
I advise solicitors, funders, insurers and parties on the costs consequences of funding and insurance arrangements in group litigation.
Security for costs
Security for costs is often a major battleground in collective proceedings and group actions.
A defendant may say that the claimant, class representative, special purpose vehicle or funded party will not be able to meet an adverse costs order. A claimant may say that ATE insurance, funding, undertakings or other arrangements provide sufficient protection, and that security would stifle or distort the claim.
The outcome may affect the entire litigation. Too little security may leave a defendant exposed. Too much security may make the claim commercially impossible.
I advise and appear in security for costs applications in group and funded litigation, including cases involving ATE insurance, litigation funders, overseas entities, insolvent or asset-light claimants and complex adverse costs risk.
Non-party costs risk
Group litigation may involve many actors who are not named parties: funders, insurers, directors, shareholders, special purpose vehicles, claims management companies, group companies, claimant committees and others involved in organising or supporting the litigation.
That creates possible non-party costs risk.
The risk should be considered early. A funder, insurer or commercial backer may need advice on whether its involvement could later be characterised as funding, control or benefit sufficient to justify a non-party costs application. A defendant may need advice on whether, and when, it can pursue a non-party costs order if the named claimant cannot meet a costs order.
I advise both potential applicants and potential respondents on non-party costs risk in collective proceedings and group litigation.
Costs budgeting and case management
Costs budgeting in group litigation should reflect the real structure of the case. A budget which treats a group action like ordinary two-party litigation is unlikely to be satisfactory.
The budget may need to address generic issues, individual issues, test cases, expert evidence, disclosure, claimant communication, funding costs, security for costs, certification or GLO issues, settlement processes and assessment.
I advise on costs budgeting and costs management in multi-party litigation, including the relationship between budgeted costs, common costs, individual costs and later recovery.
Budgeting is not just a procedural requirement. In group litigation, it is a financial model for the litigation.
Settlement and distribution
Settlement in group litigation can create difficult costs questions.
There may be disputes about the funder’s return, solicitors’ fees, counsel’s fees, ATE premiums, deductions from damages, common costs, individual costs, priority of payment and the fairness of the proposed distribution.
A settlement which looks attractive in gross terms may look quite different once the costs and funding structure is applied. Clients, funders, solicitors and insurers may have different interests. Those interests need to be understood before the settlement is finalised.
I advise on costs and funding issues arising from settlement in group litigation and collective proceedings, including priority, deductions, approval, distribution and disputes between stakeholders.
Competing claimant teams and carriage-type disputes
Where more than one claimant team seeks to pursue similar group claims, costs and funding may become part of the competition.
Questions may arise about which team has the better funding, the better ATE insurance, the better book of claimants, the more coherent case plan, the more proportionate costs structure, or the better arrangement for distributing recoveries.
I advise on the costs and funding aspects of competing claimant structures, including the practical risks where multiple groups seek to pursue overlapping claims.
Solicitor and own client costs in group claims
Group litigation can generate solicitor and own client costs disputes.
Clients may later challenge deductions from damages, success fees, ATE premiums, funding costs, shortfalls or the information they were given about costs at the outset. Solicitors may need to defend retainers, costs information, deductions and the structure of the funding arrangements.
These disputes can be particularly sensitive because many clients may have signed similar documents or received similar costs information. A problem in the structure may therefore be repeated across a group.
I advise on solicitor and own client costs issues arising from group litigation, including retainers, deductions from damages, funding documents, costs estimates and informed consent.
Failed or discontinued group claims
When a group claim fails or is discontinued, costs issues can become acute.
The defendant may seek its costs. The claimants may look to ATE insurance. The funder may face scrutiny. Solicitors may face questions from clients. Non-party costs issues may arise. Costs sharing arrangements may be tested. The economics of the case may unravel.
I advise on costs issues arising when group litigation fails, including adverse costs, security, ATE insurance, funder exposure, non-party costs and disputes between claimants, solicitors and funders.
Appeals
Costs and funding decisions in group litigation may be important enough to justify an appeal. The decision may affect not only the parties before the court, but the viability of the claim or the costs position of a wider group.
I advise on appeals involving costs and funding issues in group litigation and collective proceedings, including permission, grounds of appeal, prospects and the commercial value of appealing.
Who I act for
I am instructed by solicitors, claimant firms, defendant firms, litigation funders, insurers, commercial parties, class representatives, group claimants, costs lawyers and professional liability teams.
I act for both claimant and defendant interests. That is useful because group litigation costs issues are often strategic. A funding structure which is essential to the claimant may be a pressure point for the defendant. A security application which is protective for the defendant may be said to be oppressive by the claimant. Understanding both sides helps identify the real issue.
What to send when instructing me
When seeking advice on costs or funding issues in collective proceedings or group litigation, it is helpful to send:
- The pleadings or draft pleadings;
- Any certification application, GLO application or representative claim material;
- The funding agreement;
- Any CFA, DBA or solicitor retainer;
- Any ATE policy and endorsements;
- Any costs budget or proposed budget;
- Any costs sharing agreement;
- Any security for costs correspondence or application;
- Any settlement agreement or draft settlement terms;
- Any documents about deductions from damages;
- Any order or judgment relevant to costs;
- The amount at stake;
- The procedural stage of the case;
- Any hearing date or deadline;
- A short note identifying the real costs or funding issue.
In group litigation, a diagram or short explanation of the funding and party structure is often particularly helpful.
Instructing me
I am often instructed where costs, funding, adverse costs risk or settlement economics affect the viability or strategy of collective proceedings, group actions or other multi-party litigation.
These issues should usually be considered early. In group litigation, the costs structure is not a footnote. It is part of the machinery of the case.
For availability, fee arrangements and urgent enquiries, please contact my clerks at Hailsham Chambers.