While each funder uses a unique set of criteria to assess the potential value of investing in a case, lawyers are likely to find similarities in the factors taken into consideration.
Involving an experienced litigation funder at an early stage can give clients a significant strategic advantage, certainty about how their litigation will be resourced, and eliminate adverse costs risk.
Litigation funding may provide an effective alternative to selling receivables for law firms looking to quickly improve cash flow, enhance profitability, and preserve future revenue.
Law firm portfolio funding is a form of litigation finance involving a third-party investment in several cases on which the same law firm has been engaged on a contingency basis.
Claim value is unquestionably a key factor in the funding decision. A $1 million claim can be as complex and expensive to run as a $5 million claim. As claim value moves below $1 million it is likely to be less commercially viable to fund. An inflection point is reached where the costs and risks approach or exceed potential recoveries. In the insolvency context, Court approval, if required, may depend upon the Insolvency Practitioners demonstrating that pursuing the claim is in the creditors’ interests. To that end Courts have regard to claim value and likely return to creditors .
IMF Bentham re-introduced funding for small claims due to the continuous amount of enquiries it was receiving from claimants with meritorious small claims but a lack of funds to pursue them. Find out more about how small claims funding can help to minimise litigation risk for both claimants and practitioners.
In September, Bentham hosted leading experts, litigators and academics for a roundtable discussion about the role that litigation funding might play in Canada.
Earlier this month, the Queensland Parliament enacted legislation to allow class actions to be commenced in the Supreme Court of Queensland. The new regime largely adopts class action procedures already in place in other jurisdictions. IMF Associate Investment Manager, Alexandra McVay, details more about the new regime.
On 26 October 2016 the Full Federal Court made its first potential "common fund order" in the class action Money Max Pty Ltd (Trustee) v QBE Insurance Group Limited. Provided the funder, applicant and solicitors for the applicant undertake to comply with the court sanctioned funding terms, the Court will make orders, including that the applicant and all group members pay the funder a Court approved funding fee from any recoveries.
Earlier this month, Hong Kong’s Law Reform Commission recommended that the common law principles of maintenance and champerty, which have held force in Hong Kong far longer than other jurisdictions, should no longer apply to arbitration and associated proceedings. This development comes hot on the heels of the promulgation of Singapore’s Civil Law (Amendment) Bill, anticipated to become law by the end of the year, abolishing maintenance and champerty in arbitration and certain other proceedings.
The latest issue of Norton Rose Fulbright’s International Arbitration Report focuses on recent changes to the rules surrounding third-party funding in international arbitration.
Litigation funding provides in-house counsel with the ability to pursue claims while overcoming the objections they typically hear from their financial team.
