Inside this Page 3 issue: How To Beat The Norm-Man!
Page 5 Work in Progress – The Undervalued Asset
Page 6 Who’d be a Costs Judge?
Issue No 14
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costs in brief How will Jackson Affect Litigation Funding? I start by making a few basic comments. The law of the land exists primarily to protect the rights of its citizens as individuals in their day to day lives and in their legitimate enterprises and going to Court may be the only way to resolve a dispute or to get or keep something to which they are entitled. Sir Melford Stevenson once said – “For most people embarking on litigation is a major financial hazard, posing a problem of terrifying human dimension”. Solicitors, Counsel and Experts command premium professional fees and if you lose you pay the other sides costs as well as your own. Historically litigation became the luxury, even the indulgency, of the rich individual or the large corporation and access to natural justice has often been denied on the grounds of cost alone rather than on the merits of the case – an injustice in itself. With that background where do we stand on third party litigation funding? Litigation funding has come a long way in the UK since the Conditional Fee Agreements Regulations were introduced in 2000 and the Access to Justice Act was passed in 1999. Since then, and in many ways due to the publicity arising from the funding by IMLF of the Stone & Rolls v Moore Stephens case, the market has developed substantially as new players have emerged and the range of product offered has expanded. Solicitor firms, Barristers and Forensic Experts are all now increasingly aware of the benefits and helpful disciplines that funders can bring to claims. I should make it clear that litigation funding as discussed in this article means funding of major commercial or insolvency related
claims, and not personal injury or medical negligence claims. It is worth noting that litigation funding has existed in other jurisdictions in the world at least as long as it has been around in the UK. Australia has a well developed funding market, the US has established contingency fee arrangements as well as third party funding, and funding is emerging in Canada. Funding has existed in Germany, Switzerland and the Netherlands for a substantial period of time. However each jurisdiction has its own characteristics and legal system, and therefore its own product offering. Let us explore the characteristics of the UK market together, the products available and how they interact. I will comment at the end on the opportunities and challenges for Funders arising from Lord Justice Jackson’s recent report on the costs of litigating in England and Wales. It is by now well established that a Solicitor is required under rule 2.03 of the Solicitors Client Code to advise a litigant at the outset of a claim as to the options open to the client to fund the costs of litigation. Those options include, inter alia, Conditional Fee Agreements’s (“CFAs”), insurance cover and third-party funding. We think it is good practice for the client to request certain additional information from the Solicitor
‘There is little point in chasing rainbows!’
at the outset, including an accurate and comprehensive estimate of the costs required to take the action all the way through to the end of trial. It is most certainly not in the client’s interests to get part way through the process only to discover that it cannot afford to fund the claim through trial. This is all the more important as the complexities of litigation lead to cost overruns more often than they lead to cost underruns. Such an estimate should be comprehensive, including Barristers costs, Experts costs, disclosure costs, security for costs (whether by way of deposits in Court or otherwise), potential for Adverse Costs Orders along the way, VAT and the Defendant’s costs if the claim is unsuccessful. Also the creditworthiness of the Defendant should be assessed at the outset, as there is little point in chasing rainbows! In terms of coverage and interaction of funding products, you will find that they can interact together or they can stand alone. The decision as to what mix to put in place belongs to the client, helped by the advice from the Solicitor. The Solicitor can advise on what choices are available, but the client should always be aware that the choice is theirs. After the Event insurance (ATE) will cover the client for Adverse Costs Risks, and usually the client’s own Barrister’s and Expert’s fees up to the policy limit.