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Disputes Funding

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Clyde & Co Fund

Clyde & Co has formed a relationship with Litigation Capital Management Limited (LCM), a leading international provider of dispute financing solutions, to finance disputes undertaken by our clients.

LCM has made available a multi-million pound fund to provide funding for cases for our clients. This funding facility is available for qualified clients and can be utilised for litigation and arbitration spend, subject to satisfactory completion of external due diligence. LCM makes the final decision on the investment and terms for each investment are tailored and specific to each client and situation.

The benefits for our clients include:

  • Reduced financial risk
  • Preservation of cash for operating activities, rather than dispute resolution
  • Provision of adverse cost indemnities
  • Dispute costs are removed from the P&L and balance sheet “drag” is eliminated
  • Funding is non-recourse

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How dispute finance works

Dispute finance, or third party funding, is the process whereby a ‘funder’, which has no direct interest in a piece of litigation, pays the legal costs for one of the parties.

In return, the funder receives a return on their investment which is conditional on the success of the case and is paid out of the proceeds of the action.

It is usual for that return to be a multiple of the amount that was advanced, or a percentage of the proceeds, or some agreed combination of both. The amount of any return will reflect the risk involved, the amount of capital invested and the length of time the investment is at risk.

Due diligence

A review process is undertaken before any funding is agreed.
  • Due diligence undertaken involves the assessment of a case against the funding criteria in order to measure the risks
  • All information exchanged is confidential with express provisions protecting against waiver of any privilege under a Non-Disclosure Agreement
  • The time required to conduct due diligence varies, our aim is for due diligence to be completed within 30-60 days, provided all required documentation and information is provided, and depending on whether it is a single case or a portfolio

Portfolios

Traditionally, funders have financed single, isolated claims. Funding of a single claim carries a high degree of risk for the funder because if that claim is unsuccessful the funder will not recover its investment.

Multiple claims can be packaged into a portfolio and the financial risk for the funder is diversified across the book resulting in lower capital risk and therefore a lower return charged by the funder.

  • A portfolio typically consists of a minimum of three claims
  • The funding costs for a portfolio are lower due to the decreased risk profile relative to a single case
  • Cases may be added into a portfolio over time and the funding facility can be adjusted accordingly. A framework agreement can be created with just one case
  • A portfolio can comprise different types of cases and include low value claims as well as defence cases

Monetise

It may be possible to monetise a proportion of the portfolio’s value as part of a dispute finance offering.
  • Any amount monetised will depend upon the total claim quantum in the portfolio and the total legal costs budget. Up to 25% of the portfolio value may be available, including legal costs
  • In some cases, matters may be imported into a portfolio where there is a desire to unlock value quickly
  • Tax liabilities may apply, depending upon how the monetised value is booked and any jurisdictional tax laws. Independent tax advice should always be taken

Our approach

  • You are in control: It is imperative at the beginning of the process to work with clients to understand the case strategy. But day-to-day conduct of the cases are agreed jointly provided there is no impact on the terms of the funding
  • Portfolio cases are not cherry-picked: A portfolio will require certain “anchor” cases that drive the portfolio value
  • Every client and every situation is different: We work together to understand the issues and the drivers behind the need for financing; to provide the best, customised finance solution

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Key practice areas

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