Insolvency & Reorganisation
Third-Party Funding in the Context of Insolvency: Principles on When the Court Will Sanction Third P
Providing clients with essential tools for litigation resolution.
Dispute finance offers a solution for those who cannot pursue strong claims due to the associated costs and perceived risks, and/or offers a solution to those who want and choose to take the cost of the dispute(s) off balance sheet.
Dispute finance provides the ability to transfer risk, release resources back to the business, realise revenue from claims and to avoid the adverse accounting impacts from ongoing dispute expenditure.
We have good working relationships with all the leading funders, working with our clients to find the best solution in each case.
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.
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.
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.