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How UK businesses can benefit from Litigation Funding

How UK businesses can benefit from Litigation Funding

Commercial litigants, particularly smaller companies, are increasingly struggling to pay the legal costs necessary to resolve their legal grievances. This includes the cases that reach the courts, the high proportion settled without a hearing and those resolved by arbitration.

Why businesses might need to take legal action

Businesses may need to take legal action for a variety of reasons, including employment issues, theft of intellectual property, disputed tax assessment, copyright infringements, customers refusing to pay for goods or suppliers who breach their contracts.

In an era of economic austerity, when cash flow is on a knife edge, there can be a huge gap between knowing you have a strong case and having the capital available to meet the necessary legal costs.

How can Commercial Litigation Funding help businesses?

Litigation Funding manages the costs and risks of commercial legal cases. It has been a tried and trusted solution for UK businesses for many years. It can provide all or some of the cash needed to fund legal action.

The money comes from a neutral third party, and businesses simply pay it back from the settlement received and only in the event of a successful claim.

Before proceedings start, the business and the litigation funder agree terms, so that the money is paid back with interest or as a proportion of the financial settlement from the case. These are all pre-approved terms that would have been agreed by all parties prior to the release of the funding.

What can Commercial Litigation Funding cover?

The Commercial Litigation Funding can cover not just legal fees, but also the cost of expert witnesses, reports, consultants, and any investigations or additional information needed to strengthen a claim. If the case is unsuccessful for whatever reason, the commercial litigation funding is written off.

What other benefits are there from litigation funding?

Businesses can use the funding as an accounting positive, to flex their financial strength when dealing with well resourced opponents and to ensure they have the right team of commercial litigators and consultants to maximise the chances of success.

Businesses can also draw on the insights and experience of their litigation funder, who should be selected based on their specialist knowledge. Though they can’t get actively involved in the legal claim, the funder can provide advice and support to help claimants reach a positive outcome.

Is litigation funding an endorsement of the claim?

Any funder worth their salt will study your case carefully before going ahead. They can’t get involved in it – that is written into the Code of Conduct for Litigation Funders – but they are going to want to make sure your business has a reasonable chance of success.

If they decide to back you, then it gives you the confidence that a professional third party has faith in your side of the legal argument.

Increasing numbers of legal firms are directing clients to litigation funding to support civil lawsuits. In fact, it’s interesting to note that some legal firms even use litigation funding to manage their financial risks. If they take on legal work based on conditional fee arrangements, they can secure funding to support their portfolio of litigation claims.

Contact us today to discuss how your company can benefit from our commercial litigation funding services.


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