Harbour View Q1 2016

Harbour View Quarter 1 2016

Featuring news from the Team at Harbour Litigation Funding. Visit our website for more in depth details

harbourlitigationfunding.com

Contents Page 4 – 6

— Groundhog day in the debate over legal costs

M ichael Hartridge, Harbour Senior Director of Litigation Funding gives

Harbour’s insight on the ongoing debate over the rising cost of legal services.

Page 8 – 14 — Costs Budgeting: A practical approach in an uncertain regime Matthew Shankland and Sarah Lainchbury of Sidley Austin give an overview

of the recent developments in case law and practical advice for completion of the cost budget.

Page 16 – 21 — Flexibility in funding: Not just a one trick pony

Mark King, Harbour Director of Litigation Funding outlines the range of options offered by funders to better meet the needs of the parties who can benefit from funding.

Page 22 – 23 —

Harbour News

Introduction

T

In the funding industry there has been a lot of interest in the many ways in which funders can provide support. There have been some headline-catching stories and so Mark King of Harbour gives an objective view of funding options. The clear message is that as litigation and arbitration specialists, funders have always created bespoke solutions.

However, as awareness has grown of what we do, so too has the opportunity to apply more broadly our solution-creating skills.

he issue of costs is never far away from any of us engaged in litigation or arbitration.

Whether the debate is at the level of

public policy or individual cases, the challenges are similar. As a funder, our aim is always to ensure budgets are set realistically and then managed to leverage the maximum benefit. This does not mean spending less but rather spending better. These ideas are picked up in this edition of Harbour View as two of our contributors tackle the subject head-on. Michael Hartridge

To be kept informed on Harbour’s news and updates as well as previous issues of Harbour View visit www. harbourlitigationfunding.com

of Harbour talks about the rising cost of legal services whilst Matthew Shankland and Sarah Lainchbury of Sidley Austin address the Costs Budgeting regime.

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ARTICLE ONE – GROUNDHOG DAY IN THE DEBATE OVER LEGAL COSTS

Groundhog day in the debate over legal costs Michael Hartridge Senior Director of Litigation Funding

W

e have been here before. In February of this year (on Groundhog Day, as chance had it), the legal press

was dominated by an issue that has rumbled on unresolved since the implementation of the Jackson reforms in 2013 – the rising cost of legal services.

The issue manifested itself in contrasting ways. At one end of the spectrum was the report from the Centre for Policy Studies1 (seized on by the national media) of City partners’ hourly rates topping £1,000 an hour. At the other, twin proposals by Lord Justice Jackson for fixed costs for cases with a claim value below £250,000 and the establishment of a Contingent Legal Aid Fund, as a response to the limited availability of legal aid.

Elsewhere in these pages, Sarah Lainchbury and Matthew Shankland discuss the practical challenges faced by litigators in preparing budgets for cases governed by the Precedent H regime (which covers

court. The adverse implications of getting it wrong

cases up to a value of £10 million, and which was

were well publicised back in late 2013, when the

itself introduced as part of the Jackson reforms).

case of Mitchell v News Group Newspapers2 gave the

As their article illustrates, litigators wrestling with

court an early opportunity to stamp its authority.

that regime need to ensure that their assumptions

Even after twenty months in operation, however,

are

it seems the profession as a whole continues to

reasonable,

and

contingencies

carefully

considered, if a budget is to be acceptable to the

struggle with the regime.

1 The Price of Law, by Jim Diamond, Centre for Policy Studies 2 [2013] EWCA Civ 1537 – Andrew Mitchell QC’s solicitors’ failure to file a properly compiled cost budget more than 7 days before the case management as required by the relevant procedural rules resulted in costs of over £500,000 being excluded.

4

ARTICLE ONE – GROUNDHOG DAY IN THE DEBATE OVER LEGAL COSTS

It is worth pausing for a moment to consider why

around fixed costs) it is hard to imagine the same

these measures were brought into play in the first

tolerance being extended to a practice of providing

place, and why, despite all of the changes over the

an estimate for work with the caveat that the final

last few years to the civil costs regime, the area

bill might be double the number you first thought of.

continues to provoke so much debate.

Sadly, we see that all too frequently in our role At base, the developments in this area point towards

as litigation funders. A constant challenge that

two relatively simple objectives: a desire on the part

we encounter in assessing the viability of potential claims is the inability of law firms to predict with any accuracy the likely cost of a matter at the outset.

We are not alone in this space. The same report by the Centre for Policy Studies mentioned above included observations from peer funders about the issues they face with budgets prepared by law firms. Poor budgeting (and in particular the lack of sufficient detail in a budget) undermines funders’ ability to assess the risks of funding a case, which means in turn that otherwise promising cases may be rejected. And once in progress, poor budget management – bluntly, firms’ inability to stick to budgets that they themselves have put together – is all too common a feature of life.

These observations are more concerning given how long the debate has been running, not to mention the increasing insistence by law firms that sophisticated in-house technology helps to inform their expectations for preparing budgets for new matters. Whilst that technology may exist, the learnings from it are not yet making

of litigants for greater certainty about the cost of

their presence felt in a meaningful way, to clients’

litigating; and a keenness that the cost of litigation

detriment. Too often, clients are confronted

should not end up overwhelming the substance

with a larger than expected fee note, a regretful

of the dispute itself. Whilst most seem agreed that

explanation that the work took longer than

those objectives are desirable, the profession as a

anticipated, and expected simply to accept that

whole seems no nearer to finding a solution to either.

this is an unavoidable fact of litigation.

Move the focus away from the legal profession for

Lord

a moment, and (notwithstanding the application

regarding the application of fixed costs for

of Precedent H to relevant cases, or new proposals

cases with a value below £250,000 has certainly

5

Justice

Jackson’s

recent

suggestion

ARTICLE ONE – GROUNDHOG DAY IN THE DEBATE OVER LEGAL COSTS

provoked some debate, and should probably

The fact remains though that the current situation

be considered as a starter for ten in the latest

is less than satisfactory for protagonists on both

round of discussions on the cost of litigating.

sides of the courtroom. Reasonable certainty

The general principle behind the proposal -

on the cost of litigation, relative affordability, and

that the cost of pursuing or defending a claim

access to justice seem as far away as ever, and it’s

should be kept in proportion to its value - is

far from clear that initiatives like Precedent H have

a hard one to argue with. Whilst there will be

made any real difference.

cases from time to time where the principle at stake (and the cost of establishing that

On the contrary, if the significant increase in

principle) exceeds the value of the claim in

funding inquiries that we receive is any indicator

which it is raised, the pragmatic nature of

(and in particular from corporate claimants),

litigation as a discipline means that those cases

the cost of litigating is steadily escalating out of

are likely to be less rather than more frequent.

reach of all but the most cash-rich protagonists.

And the issue of dealing with costs in those limited circumstances can surely be dealt with

There was a certain irony in the fact that Lord

by appropriate case management.

Justice Jackson’s suggestions were aired on Groundhog Day. Over in the United States, the Americans’

own

weather-forecasting

rodent

predicted an improvement in the weather.

Back here in the UK, Groundhog Day on the costs debate has left many thinking “Here we go again” with no immediate prospect of any change for the better.

6

“If, at the conclusion of a case more costs are claimed than are budgeted for, they will (probably) not to be recoverable.�

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ARTICLE TWO – COSTS BUDGETING: A PRACTICAL APPROACH IN AN UNCERTAIN REGIME COSTS

Costs Budgeting: A practical approach in an uncertain regime Mathew Shankland (Partner) and Sarah Lainchbury (Associate) of Sidley Austin LLP

A

lthough costs budgeting has now been

supporting Practice Direction 3E. CPR 3.12 requires

in place for over 20 months, the detailed

parties to proceedings to file and exchange costs

implementation of the scheme is still

budgets in a specific format (‘Precedent H’) in all Part 7 multi-track cases unless:

relatively untested” per Warby J in Yeo v Times Newspapers Ltd [2015] EWHC 209 (QB).

• the claim is commenced after 22 April 2014 and the value of claim is more than £10 million; or

The costs budgeting regime has been operating in some form for almost three years. Its scope was

• the matter is subject to fixed or scaled costs (prescribed by CPR 45, e.g. uncontested cases, small claims and enforcement proceedings); or

extended in April 2014 and now covers cases up to £10 million in value. There are a number of issues which should be considered by clients and their practitioners in the cost budgeting process, and,

• where the Court, in its discretion, otherwise orders.

while Yeo gave some much needed guidance on the issues, the position remains unclear in many respects. This article provides an overview of the recent developments in case law and practical

The emerging position, however, is that the first two

advice for completion of the cost budget.

limitations should not be enforced too strictly and should always be subject to the Court’s discretion.

The overriding factor to remember when preparing

See, for example, Coulson J’s comments in CIP

a cost budget is that if, at the conclusion of a case,

Properties v Galliford Try [2014] EWHC 3546 where

more costs are claimed than are budgeted for, they

he stated that, even where exceptions might apply,

will (probably) not be recoverable. It is, therefore,

the use of costs management should be considered

imperative to ensure that careful thought goes

and cost budgets are “generally regarded as a good

into preparing the budget in order that the risk of

idea and a useful case management tool”. In this case,

exceeding it in the future is minimised.

the Claimant had served a number of unexpected expert reports, and the Defendant therefore made an application for the costs budgeting regime

Application of the new regime

to apply so as to preclude the Claimant from conducting proceedings in the same costly manner going forward.

The costs budgeting regime is governed by Section

In emphasising the importance of the Court’s

II of Part 3 of the Civil Procedure Rules (‘CPR’) and

discretion, Coulson J gave an example of a

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ARTICLE TWO – COSTS BUDGETING: A PRACTICAL APPROACH IN AN UNCERTAIN REGIME COSTS

Precedent H

party “framing” their claims for simply £1 more than £10 million in order to avoid any

W

consideration by the Court of the proposed costs

(no

matter

how

disproportionate

or inflated they may be). Accordingly, in circumstances

where

the

value

of

here the regime applies, the entire case must be budgeted unless the Court orders otherwise. Clients

the

and practitioners should also bear in mind

claim itself is disputed, parties can, and, in

that, save in exceptional circumstances: (i)

appropriate cases, should apply for an order

the recoverable costs of initially completing

that costs budgeting apply. This is particularly

Precedent H shall not exceed the higher of

so where there is a risk that the costs of the

£1,000 or 1% of the approved budget; and (ii)

proceedings could become disproportionate to

all other recoverable costs of the budgeting and

the actual value of the claim1. As a matter of good

costs management process shall not exceed

practice, it is suggested that clients and their

2% of the approved budget.

practitioners consider proportionality of the costs to the dispute from the outset. As we

Precedent H is broken down into eleven distinct

understand from Harbour, they have seen an

phases, each of which must include the parties’

increasing number of their £10 million plus cases

incurred costs (i.e. costs actually incurred including

being submitted to the costs budgeting process.

WIP) and estimated future costs.

9

“As a matter of good practice, it is suggested that clients and their practitioners consider proportionality of the costs to the dispute from the outset.�

10

ARTICLE TWO – COSTS BUDGETING: A PRACTICAL APPROACH IN AN UNCERTAIN REGIME COSTS

Making the right assumptions and planning for contingencies

C

ompiling the estimated costs sections of Precedent H is more challenging.

“Assumptions are imperative in allowing the Court and other parties to understand how the budget has been created.”

It is not always clear what costs fall

within each of the distinct phases of Precedent H. The Guidance Notes are instructive, but the individual practitioner’s drafting approach will, of course, vary. Under ‘Disclosure’, for instance, the Guidance Notes provide that “reviewing

documents”

and

“correspondence...

about the scope of disclosure and queries arising” should be included in the figures for that phase; however, sums in relation to any application for specific disclosure are specifically excluded from the estimated costs.

between the different options is therefore It appears then that parties have three options:

fundamental to successful budgeting.

(i) to include an application for specific disclosure

Assumptions

as a ‘contingency’; (ii) to include an ‘assumption’ in relation to the scope of the opposition’s disclosure;

• Assumptions are imperative in allowing the Court and other parties to understand how the budget has been created and provides a benchmark upon assessing the budget’s reasonableness.

or (iii) revise the budget later down the line.

The distinction between each of these options (whatever procedural aspect is being dealt with) is important, and care should be taken

• Making good use of this feature appears to give parties some scope to revise budgeted figures later3.

when drafting and deciding which particular option to pursue. Clients and practitioners should pay close attention to the provisions

• Examples include: “there will be no (further) amended pleadings”, “trial will be 5 days”, “it is intended that witness evidence be taken from X, Y and Z; if any potential witness is unavailable when called upon the additional expense involved in locating a new witness can be reflected in a revised budget”.

of Practice Direction 3E and the relevant case law which strongly suggests that parties should not over-caveat with extensive assumptions2.

Any contingent costs which are included must be anticipated and foreseen as more likely than not to be required. Striking the right balance 1 This was the case in CIP Properties v Galliford Try [2014] EWHC 3546.

2 See, for example, Coulson J’s comments in CIP Properties where he noted that the excessive use of assumptions is a “wholly illegitimate exercise in avoiding the certainty and clarity that comes from case management orders; it is designed to undermine the whole basis of such orders”.

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ARTICLE TWO – COSTS BUDGETING: A PRACTICAL APPROACH IN AN UNCERTAIN REGIME COSTS

Contingencies

be included as a contingency “only if it is foreseen as more likely than not to be required”. He added that, “if work that falls outside one of the main categories is not thought probable, it can reasonably be and should be excluded from the budget”.

Contingencies should therefore be drafted clearly and realistically.

• A contingent cost is marked in Precedent H as an additional phase and, according to the Guidance Notes, must reflect “anticipated costs” which do not naturally fall within one of the pre-set phases.

• In Yeo, Warby J stated that work should

The importance of regularly reviewing the budget

C

lients and practitioners must conduct a

a cost which is not budgeted for becomes reasonably

regular review of all costs of the proceedings

likely to be incurred. Crucially, budgets should not

as they develop against the approved budget.

be revised after that cost is actually incurred as the

Revisions to budgets should be considered as soon as

risk is that the Court will not allow it4.

3 Clearly any application to vary the budget will be considerably assisted if parties are able to demonstrate that the reasonable assumptions on which the budget is based have been departed from.

4 See Venus Asset Management Limited v Matthews & Goodman LLP [2015] EWHC 2896 (Ch) which provides useful summary of the degree of diligence required in this regard.

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ARTICLE TWO – COSTS BUDGETING: A PRACTICAL APPROACH IN AN UNCERTAIN REGIME COSTS

In Venus Asset Management Limited, both parties applied for retrospective revisions to their approved

“Cost budgeting is becoming a core part of the litigation process and accurate forecasting is therefore imperative.”

budgets on the basis that the costs actually incurred were greater than the budgeted figures. In refusing the application, Chief Master Marsh held that the language used in the CPR clearly pointed to “the court’s costs management powers being limited to future costs”. Paragraph 7.3 of Practice Direction 3E provides that the Court “will not undertake a detailed assessment in advance”. Similarly, in the Commercial Court Users’ Group Committee update dated 16 October 2015, on analysing recent developments in case law (and, in particular, Yeo), HHJ Waksman QC (Mercantile Court) noted that, where parties have a costs budget and see an “overshoot looming”, an application to revise the budget should be made

parties should utilise this provision and, should a

promptly and before the budgeted figure is exceeded.

“significant development” in the proceedings occur, a revised budget should be prepared in line with

Pursuant to paragraph 7.4 of Practice Direction

paragraph 7.4 of Practice Direction 3E (which is

3E, if, by the time the costs management process

then agreed or approved).

takes place, substantial costs have been incurred, the Court may “record its comments on those

Whether there is good reason to depart from the

costs” and the Court will “take those costs into

approved budget in any given case is likely to depend,

account

among other things, on how the proceedings have

when

considering

the

reasonableness

been managed, whether they have developed in a

and proportionality of all subsequent costs”.

way that was not foreseen when the relevant case management orders were made, and whether the costs

Revising budgets for unforeseen interim applications

T

incurred are proportionate to what is in issue5.

In preparing a budget, parties should assume that their opposition will comply with the CPR and conduct proceedings in accordance with the order for directions (making adverse assumptions about the

he

provisions

of

paragraph

7.9

of

opposition’s possible future behaviour are unlikely to

Practice Direction 3E state that, if interim

be viewed as justified). Equally, parties should not

applications are made which, reasonably,

include a contingency (for example, for an interim

were not included in a budget, then the costs

application) unless it is reasonably foreseeable. It

of such interim applications shall be treated as

is therefore suggested, in any event, that parties

additional to the approved budgets. Warby J in Yeo

use the provisions of paragraph 7.9 of Practice

also noted that, should the “improbable” occur,

Direction 3E in relation to interim applications.

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ARTICLE TWO – COSTS BUDGETING: A PRACTICAL APPROACH IN AN UNCERTAIN REGIME COSTS

Proportionality and approval of budgets

T

report must set out the figures which are agreed and those which are not agreed for each phase and a brief summary of the grounds of dispute.

he cases to date do not provide a coherent approach to the questions of

Conclusions

reasonableness and proportionality in

budgeting terms. In Yeo, it was suggested that,

are reasonable and proportionate, it may also

P

be appropriate to consider the hourly rates and

assist parties in managing costs to resolution. Cost

number of hours claimed or forecast. In the

budgeting is becoming a core part of the litigation

authors’ experience, the usual judicial approach

process and accurate forecasting is therefore

is to focus more on the total costs claimed

imperative for the reasons set out above. The

than the detailed build up of that number (the

importance of proper costs budgeting for parties in

balance of cases support this). However, in all

all forms of litigation should not be underestimated.

whilst the Court’s primary consideration when approving budgets is whether the total costs proposed for each phase of the proceedings

roducing

a

proper

budget

can

more than the amount recoverable for it

under the CPR). Costs budgets can, however, greatly

cases, an objective approach should be taken to consider whether the estimated costs can be

Matthew Shankland and Sarah Lainchbury

justified as reasonable and proportionate in the

Sidley Austin LLP

circumstances.

83rd update to the CPR, April 2016

T

take

considerable time (and can, therefore, cost

he 83rd Update to the CPR Rules6 includes important changes to the costs budgeting regime. Notably, for all claims (irrespective

of value), where parties file and exchange budgets they must also file an agreed budget discussion report no later than seven days before the case management conference. The budget discussion

5 See Henry v News Group Newspapers Ltd [2013] EWCA Civ 3 and Murray & Anor v Neil Downlman Architecture Ltd [2013] EWHC 872 (TCC).

6 See: https://www.justice.gov.uk/courts/procedure-rules/civil

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“Funders are providing an increased range of options in a bid better to meet the needs of parties who can benefit from funding.�

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ARTICLE THREE – FLEXIBILITY IN FUNDING: NOT JUST A ONE TRICK PONY

Flexibility in funding: Not just a one trick pony Mark King, Director of Litigation Funding at Harbour

T

hird party funding is historically and

they too can share in the success of a claim

most commonly understood as the

by sharing in the proceeds and funding the

funding of a claimant’s claim where they

adverse costs of a claim. Elsewhere, the market

do not have the funds to do so by themselves or

has also seen BT agree a portfolio funding

where they would rather not take the risk of the

arrangement with Burford Capital, and that

legal costs involved. However, as it evolves it is

same funder has also entered into a joint

quickly demonstrating that it is not a one trick

venture with the competition law specialist,

pony – funders are providing an increased range

Hausfeld, in order to focus on funding claims

of options in a bid better to meet the needs of the

in Germany. These events are testimony to

parties who can benefit from funding, and also

the fact that market forces are at work in the

to set themselves apart from the competition.

third party funding sector as the supply of funding evolves to meet new demand from the

Harbour’s own experience has included offering

increasingly diverse range of claimants who

portfolio funding, working with solicitors so that

now use funding.

16

ARTICLE THREE – FLEXIBILITY IN FUNDING: NOT JUST A ONE TRICK PONY

The purpose of this article is to walk through

include product liability cases (e.g. where a number

some of the main third party funding options

of claimants have incurred loss and damage from

available, explaining what they are, key issues

a product manufactured by one defendant) or

to be considered for each and how they may be

shareholder disputes.

better suited to parties’ particular circumstances than other existing funding options.

Single case funding is best placed for directly funding a claimant to pursue a single claim, set of claims or class action, particularly high value

Single case funding

T

expensive claims where law firms are unwilling or unable to offer Conditional Fee Agreements (“CFAs”) or Damages Based Agreements (“DBAs”)

his is funding in its most traditional form

for some or all of the legal costs. It can also be

and one which most will think of when

coupled with a suitable After the Event (“ATE”)

asked to describe third party funding.

insurance policy to cover the adverse costs risk, as

This is understandable as it is the most common

Harbour does in the majority of its cases.

form and its popularity is arguably due to its simplicity. At the most basic level, it is where a

The funder’s recovery is from the proceeds upon

funder agrees to fund all the claimants’ costs

success (i.e. monies recovered) and provides a clear,

of a case, including covering adverse costs, in

fixed and accessible recovery with nothing to pay if the

return for a share of the proceeds if the claim

claim is not successful and no monies are recovered.

is successful. This is attractive to claimants as it provides a clear and straightforward method of

Portfolio funding

funding the legal costs of bringing a claim.

This type of funding is usually for one claimant

similar claims. Funding class actions is relatively

P

common in many jurisdictions such as England

First, it may be that a funding agreement is

and Wales, the USA, Australia and New Zealand.

made with a claimant directly for a number of

One of the reasons for this is because claimants by

claims which they have or may have in the future

themselves do not have sufficient funds to pursue

(most suited to large corporations and financial

their claim and/or their claim value alone would

institutions with a large book of litigation). The

not make funding it economic for many funders.

corporation/institution then has no costs for

However, if grouped with a number of claimants

pursuing good claims unless the claim is successful

who have similar claims, the ‘global’ claim value

when they pay the funder the agreed success

can be significant and funding the legal costs for

fee. That way monies which would have been

all claimants becomes proportionate. Common

used for legal costs can be used elsewhere in

examples of class actions ripe for portfolio funding

the business instead.

with a single claim, a number of claims arising from one dispute or a class action where there may be many claimants all with the same or very

17

ortfolio funding is becoming increasingly common in the funding market and usually takes one of two forms.

“There is a great deal of flexibility in what can be offered to a party in a dispute.”

18

ARTICLE THREE – FLEXIBILITY IN FUNDING: NOT JUST A ONE TRICK PONY

Second, it may be that a law firm is able to refer

funding. Solicitors can also utilise funding (whether on

a number of similar claims which it considers

a full or partial basis) as an effective risk management

suitable

clients.

tool in the operation of their business where they do

Agreements can also be made to fund a specific

not necessarily have the appetite to operate on a full

list of claims which meet pre-agreed criteria. The

DBA with all the third party costs that entail. Harbour

law firm may also seek co-funding in conjunction

has also developed its own hybrid DBA to work

with its own CFAs or DBAs which it may already

with law firms, having obtained advice from three

have in place for claims in a portfolio, in order to

QCs that it complies with the current regulations.

share the risk and also share in the success of the

Given the confines of this article, it is not intended to

claim (see partnership funding below).

address such issues in detail but their importance as

for

funding,

from

various

a consideration of using third party funding by legal Regardless of the forms that portfolio funding may

representatives should not be underestimated.

take, the key considerations for the funder will be how to assess the overall risk of what is presented.

In such circumstances, a pre-determined checklist of issues (e.g. creditworthiness of each defendant, minimum value of each claim, maximum costs for each claim, particular type of dispute etc.) will be used by the funder better to understand the risk posed and the budget for funding the portfolio as a whole will be an important consideration.

Typically, the level of risk will decrease as the portfolio broadens (in number of claims, projected costs, merits of each claim etc.) but so

“Parties and representatives should not assume that their case is not appropriate for funding until they have had a discussion with a funder.”

too will the rate of return sought by the funder.

Partnership funding with the law firm

A

s this article is focused upon the role of a third party funder, it is not intended to provide an in depth analysis of

funding which might be offered by the legal representatives instructed on particular claims such as CFAs and DBAs. These funding options demonstrate that it is not just the claimants who can benefit from third party

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ARTICLE THREE – FLEXIBILITY IN FUNDING: NOT JUST A ONE TRICK PONY

Funding of adverse costs risk only

I

Loan

A

t may be that a claimant only wants to cover its adverse costs risk presented by pursuing their claim (for example, it has

loan

can

instalments

either or

be

when

repayable

in

the

is

claim

resolved. The key difference to the

non-recourse

funding

in

traditional

single

already entered into a CFA or DBA with its legal

case funding is that the funder’s recovery is

representatives which provides it with sufficient

the interest incurred upon the loan rather

funding for own side costs). This could either be

than a return of the proceeds ultimately

through the funder providing a cash indemnity

recovered. This would also be repayable

or by the funder purchasing an ATE policy to

regardless of whether the claim succeeds or

cover that risk. The latter is typically more cost

fails. By its nature, it would be best suited to

effective, particularly where a funder has an

funding claims of a relatively modest value

exclusive facility with ATE Insurers (as is the case

and consideration should also be given as to

at Harbour) and can obtain such cover on more

any regulatory issues which may arise and/or

competitive terms than if a claimant approached

whether security should be obtained as part of

a broker or underwriter directly.

the terms of the loan.

Equity finance

S

ome funders can also provide capital to companies by purchasing equity in the company to provide it with funds to pay

the costs of its claim (for example, through a contractual joint venture). It allows the claimant to utilise the goodwill and value of the company as consideration for the funding agreement, in addition to the potential value in the claim.

Equity finance can be preferable where the company requires the capital to stay afloat and therefore keep its claim alive or alternatively where the outcome of the litigation may result in a non-monetary outcome which would increase the value of the funder’s equity.

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ARTICLE THREE – FLEXIBILITY IN FUNDING: NOT JUST A ONE TRICK PONY

Novation/buying the claim

Conclusion

A

legalities of this need to be carefully considered.

T

A key consideration here is the extent to which

not an exhaustive list of the options available.

the novating party is required to continue to

New options will continue to emerge as the

assist the funder in pursuing the claim (for

funding landscape continues to develop. The

example, in terms of providing disclosure and

key message is that funding can be flexible and

witness evidence) after a claim has been novated.

that parties and their representatives should not

The key concern of a funder in this scenario is

assume that their case is not appropriate for

that they do not end up making a substantial

funding until they have had a discussion with

upfront payment to a claimant who is then dis-

a funder.

funder may also consider buying or taking an assignment of a claim. Not all claims can be bought or assigned so the

he variety of different options set out above demonstrate that there is a great deal of flexibility on what can be

offered to a party involved in a dispute. This is

incentivised to make the necessary commitment to see the case through to a successful conclusion because they have already been paid.

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HARBOUR NEWS - NEWS FROM INSIDE HARBOUR LITIGATION FUNDING

Harbour news

Harbour Around the World

H

arbour operates globally having funded

of her time on the ground in Australia. News of

in 12 jurisdictions and 4 arbitral forums.

further expansion of our regional presence will be

From our bases in London and Hong

announced shortly.

Kong, the team ranges widely to ensure we can be present where there is interest in and demand

Susan Dunn travelled to Bermuda, the British

for funding

Virgin Isles and to Kuala Lumpur to reinforce our local contacts. Again, these are areas where there

In February, Litigation Director, Matthew Knowles

is considerable interest in litigation and arbitration

was in Singapore and Perth meeting with

funding.

corporates, liquidators, law firms and barristers.

The demand for our services in the Asia Pacific

We continue to spread the funding message by

region is significant and Ruth Stackpool-Moore,

attending and speaking at worldwide conferences.

Head of our Hong Kong office is spending more

Litigation Director, Rocco Pirozzolo demonstrates

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HARBOUR NEWS - NEWS FROM INSIDE HARBOUR LITIGATION FUNDING

the scope of our engagement – he spoke at the

In Brief

February Solicitors’ Costs Conference on the subject of funding development before covering funding insolvency litigation for the Association

Look out for a few changes to our website

of Business Recovery Professionals, offering a

in coming weeks and news of further team

funder’s perspective on mediation for the Trust

expansion. Harbour continues to grow to

Mediation Seminar and, finally, addressing the

meet the needs of our clients

Litigation Funding and Insurance Seminar in Dublin.

For more information on Harbour Litigation Funding call +44 20 3829 9320 or visit

Others in the Team were equally active. Susan

www.harbourlitigationfunding.com

presented to the RICS conference on National Dispute Resolution in Construction and the 12th Annual Leading Arbitrators’ Symposium on the conduct of International Arbitration in Vienna.

Ruth spoke on gender diversity in arbitration in Hong Kong, on class actions for the My Platform Rules conference on the Gold Coast of Australia and at the Dispute Resolution Conference in Beijing.

In print Mark King can be found in

the April to June edition of Corporate Disputes Magazine addressing the subject of alternative risk management by third party funding.

During the next quarter, in addition to our normal presence in the Asia Pacific region you will also find Harbour in the Middle East, Malaysia and Austria.

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Featuring news from the Team at Harbour Litigation Funding. Visit our website for more in depth details

harbourlitigationfunding.com