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Home » Latest News » New options for litigation funding announced

New options for litigation funding announced

New options for litigation funding announced

As one of the region’s top law firm’s for commercial litigation, Bridge McFarland Solicitors is also leading the way in funding for commercial disputes by offering its clients an unrivalled range of innovative and flexible funding options.

Although most commercial disputes are resolved without the need for formal legal proceedings, there is no escaping the fact that litigation can be expensive and two of the most common barriers to businesses when considering a claim are financing their own legal costs and the risk of having to pay costs to their opponent.

The traditional way of funding commercial litigation is on an hourly-rate basis with the client paying their solicitor’s legal fees (and any expenses such as court fees, counsel’s fees or expert’s fees) as they go along win or lose, and many law firms are reluctant to depart from this. If they win the claim, the client can usually then recover a proportion of those costs from their opponent, subject to the amount being agreed or assessed by the court and their opponent’s ability to pay. Similarly, if they lose, they will usually be ordered to pay a proportion of their opponent’s legal costs, as well as their own. The stakes can therefore be high when funding litigation in this way.

Whilst this method of funding still has its place, Bridge McFarland has launched a package of funding and risk-sharing options to help clients fund their own costs and manage the risk of having to pay costs to their opponent.

Funding your own costs

As well as a traditional hourly-rate retainer, we offer conditional-fee based funding in appropriate cases.

• A full conditional-fee (or ‘no win-no fee’) agreement (or CFA) is where you do not pay any of your own fees as you go along and, if you lose the claim, you will not have to pay any fees to us. If you win the claim, you pay our fees at our normal hourly rates plus an agreed percentage uplift as a ‘success fee’ to reflect our share of risk in the claim. You can recover costs from your opponent based on our normal hourly rates but you cannot recover the success fee.

• A discounted-fee (or ‘no win-low fee’) agreement (or DFA) is similar, but you pay our fees at an agreed discounted rate as you go along and, if you lose the claim, have nothing further to pay to us. If you win, you pay our fees at our normal hourly rates plus an agreed (usually lower) percentage uplift.

• A damages based agreement (DBA), or contingency fee agreement, is where, rather than paying at an hourly-rate, you only pay to us an agreed percentage of any sums recovered from your opponent.

In addition to hourly-rate and conditional fee agreements, we also offer fixed fees for certain types of work or stages of a claim and, again in appropriate cases, third-party funding, which is where a specialist litigation funding provider funds your claim in return for an agreed percentage of any sums recovered from your opponent.

Disbursement funding

Funding for expenses such as court fees, counsel’s fees or expert’s fees, can also take its strain. Court fees have recently increased for claims of over £10,000 to 5% of the value of the claim, up to a maximum of £10,000 for claims over £200,000.

Disbursement funding allows these expenses to be funded by way of a loan agreement with a third-party provider. The loan and interest on it are backed by ATE insurance meaning there is nothing to pay if you lose the claim. If you win, you usually be entitled to recover such expenses from your opponent.

Your opponent’s costs

After-the-event (ATE) legal expenses insurance can be used to cover the risk of having to pay your opponent’s costs (and your own expenses) if you lose the claim. The premium is calculated as a percentage of damages (usually between 7-20%) and is staged to increase at set intervals. The ATE premium is self-insuring, meaning you only have to pay it if you win (but you cannot recover the premium from your opponent).

Funding options explained

Any of the above methods of funding for your own costs can be used in conjunction with disbursement funding and ATE insurance, meaning clients can, in appropriate cases, chose the options which suit their business best; from lower-risk but lower-return (a full CFA with disbursement funding and ATE) to higher-risk and higher-return (an hourly-rate retainer without disbursement funding or ATE) or anything in-between.

For further information, please download our information sheet at http://www.bridgemcfarland.co.uk/funding-commercial-disputes or to discuss these options with us further, please contact us.

Mike Wilson is a Partner and solicitor in the Dispute Resolution team at Bridge McFarland and can be contacted on 01482 320620 or mike.wilson@bmcf.co.uk.