Disputes Funding

How does disputes funding work?

In a funded dispute you pay nothing towards legal fees as the case progresses – these are paid by a third-party lender who has no direct interest in the litigation. When the case is successful, the lender receives its investment back, plus a pre-agreed margin that reflects the risk incurred. You get all the rest. If the case is unsuccessful, the lender gets nothing.

Key benefits:

• 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

Funded portfolio

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.

How it works:

• 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