Litigation funding is not simply a way of paying lawyers. In substantial litigation, the funding structure may affect whether a claim can be brought, whether it can survive an application for security for costs, whether the claimant can meet adverse costs risk, whether a settlement is commercially rational, and whether the funding arrangements themselves become a point of attack.
Funding is therefore not separate from litigation strategy. It is part of it.
I advise and appear in disputes involving litigation funding, retainers, CFAs, DBAs, ATE insurance, adverse costs risk, security for costs, non-party costs, settlement priority and the costs consequences of funded litigation. I am commonly instructed where the funding arrangements affect the wider conduct or value of the claim.
In high-value litigation, a funding problem discovered late can be expensive. A funding problem identified early can often be managed.
When I am instructed
I am commonly instructed where a case raises issues about:
- Litigation funding agreements;
- Conditional fee agreements;
- Damages-based agreements;
- ATE insurance;
- Security for costs;
- Adverse costs exposure;
- Funder control or influence;
- Non-party costs risk;
- Group actions and collective proceedings;
- Costs sharing arrangements;
- Solicitor and own client costs;
- Settlement priority between client, solicitor, funder and insurer;
- Challenges to enforceability;
- Costs budgeting in funded claims;
- Consequentials hearings after judgment;
- Detailed assessment involving funded litigation.
These issues may arise before proceedings are issued, during the litigation, at settlement, after judgment, or on assessment.
Advice for funded claimants
For a funded claimant, the question is not simply whether funding is available. The question is whether the funding structure will survive contact with the litigation.
A claimant may need to consider whether the funding agreement is enforceable, whether the retainer is properly documented, whether ATE insurance is adequate, whether the budget matches the real work required, whether security for costs can be resisted, and whether the funding structure will withstand scrutiny if the defendant attacks it.
I advise claimants and their solicitors on the costs and funding risks which may affect the viability of the claim. That includes early review of retainers, funding documents, adverse costs protection, budget assumptions, security for costs exposure and settlement mechanics.
The best time to review these issues is usually before they become disputed. Once an opponent has identified a weakness, the funding issue may become part of the litigation battlefield.
Advice for defendants and paying parties
For defendants, funding arrangements may provide important tactical pressure points. A funded claim may raise questions about security for costs, adverse costs protection, ATE adequacy, funder involvement, non-party costs exposure, recoverability, proportionality and settlement leverage.
Not every funding point is worth taking. Some arguments are unattractive, speculative or commercially counterproductive. Others may change the whole dynamic of the claim.
I advise defendants on when and how to challenge funding arrangements, whether to seek security for costs, whether disclosure of funding or insurance documents may be justified, how to frame adverse costs arguments, and whether a funder, insurer, director, shareholder or other non-party may be exposed to costs.
The aim is not to take every point. The aim is to identify the points which may matter.
Advice for litigation funders
Litigation funders are interested in risk, timing, enforceability and return. Costs are central to all four.
A funder may need advice on the likely adverse costs exposure, the adequacy of ATE insurance, the risk of a security for costs application, the budgeted and unbudgeted costs of the litigation, the likely costs consequences of settlement, and the possibility of non-party costs exposure if the claim fails.
I advise on funding-related costs issues from both sides of the market. That is useful because a funder’s risk is often the defendant’s opportunity. Understanding how the argument will be put against the funded party helps identify weaknesses early.
Retainers, CFAs and DBAs
Funding problems often begin with the retainer.
A claim may be funded by a third-party funder, but the solicitor’s retainer may still be central. If the retainer is defective, unclear or poorly documented, the problem may later appear in a solicitor-client assessment, a challenge to recoverability, a dispute about deductions from damages, or a disagreement over who is paid first from settlement proceeds.
I advise on disputes involving retainers, conditional fee agreements, damages-based agreements and related client care issues. In commercial litigation, the retainer should not be treated as a formality. It is part of the legal and financial structure of the case.
ATE insurance and adverse costs
ATE insurance is often presented as the answer to adverse costs risk. Sometimes it is. Sometimes it is not.
The real question is whether the policy provides adequate protection in the circumstances of the case. That may involve considering the limit of indemnity, exclusions, avoidance risk, staged premiums, timing of cover, anti-avoidance wording, the relationship between ATE and security for costs, and the extent to which the court is likely to regard the policy as sufficient comfort.
I advise on the costs consequences of ATE insurance, including its role in resisting security for costs applications and its relevance to adverse costs exposure in funded claims.
Security for costs in funded litigation
Security for costs is often the point at which funding becomes visible.
A defendant may argue that the claimant will not be able to satisfy an adverse costs order. A claimant may respond that it has ATE insurance, funding, assets, or other protection. The court may then have to consider whether security is justified, what amount should be ordered, and what form of security is appropriate.
I act in security for costs applications involving funded claims, commercial claims, overseas parties, group actions and cases where ATE insurance is relied upon as protection.
The practical question is rarely abstract. It is usually this: what order will best manage the real costs risk without unfairly stifling or distorting the litigation?
Non-party costs and funder exposure
A funder, commercial backer or other non-party may be exposed to adverse costs where it has funded, controlled, promoted or stood to benefit from litigation. The question is fact-sensitive. It may turn on control, benefit, causation, fairness, the extent of funding, and the justice of making an order.
I advise both applicants and respondents in potential non-party costs applications arising out of funded litigation. These applications require careful handling. They may involve sensitive documents, privilege issues, funding structures, insolvency, group companies, directors, shareholders, insurers and litigation controllers.
A non-party costs application should not be treated as an afterthought at the end of the case. The evidence often needs to be considered much earlier.
Group actions and collective proceedings
Funding is often central to group actions and collective proceedings. Without funding, many such claims cannot be brought. But the funding arrangements may also become a focus of challenge.
Issues may arise about the adequacy of funding, adverse costs protection, security for costs, the funder’s return, settlement mechanics, distribution, priority, governance, and the relationship between the claimant class, the solicitors, the funder and any insurer.
I advise on costs and funding issues in group litigation, collective proceedings and other multi-party claims. These cases require particular care because the costs and funding structure is often inseparable from the viability of the litigation itself.
Settlement and priority disputes
Settlement does not always end the funding problem. It may expose it.
Where damages or settlement monies are recovered, there may be competing claims between the client, solicitors, counsel, funders, insurers and other parties with an interest in the proceeds. The question may involve the retainer, the funding agreement, any ATE policy, contractual priorities, equitable liens, deductions from damages and the terms of settlement.
I advise on costs and funding issues arising at settlement, including disputes over who is to be paid, in what order, and from which fund.
Who I act for
I am instructed by solicitors, litigation funders, insurers, commercial parties, costs lawyers, professional liability teams and parties to funded litigation.
I act for claimants, defendants, receiving parties, paying parties, funders and non-parties. That breadth of perspective is useful. Funding issues are rarely one-dimensional. The same arrangement may be viewed as a route to access to justice by one party, and as a source of costs risk or tactical vulnerability by another.
What to send when instructing me
When seeking advice on a litigation funding issue, it is helpful to send:
- The pleadings, if proceedings have been issued;
- The funding agreement;
- Any CFA, DBA or other retainer;
- Any ATE policy and endorsements;
- Any costs budget or costs management order;
- Any security for costs application or correspondence;
- Any Part 36 or settlement offers;
- Any judgment or order relevant to costs;
- Any correspondence about funding, security, disclosure or adverse costs;
- The amount at stake;
- The hearing date or relevant deadline;
- A short note identifying the real funding or costs issue.
A short note explaining the commercial problem is often more useful than a large unexplained bundle.
Instructing me
I am often instructed where funding, retainers, adverse costs or security for costs may affect the wider litigation strategy. These issues are usually best considered early, before the case has hardened around a funding structure which may later be attacked.
For availability, fee arrangements and urgent enquiries, please contact my clerks at Hailsham Chambers.