Law firms increasingly see litigation funding as a useful tool to follow up claims without the need to tie up their own capital.
Although the Law Society continues to ask the government for more civil legal aid, independent sources are increasingly attractive as this market continues to grow.
Although law firms are aware of this kind of funding for cases, they need to assess claims before deciding whether to proceed. Here is what they should consider.
Legal Precedent
Firstly, is a claim supported by established legal precedent? Funders avoid speculative claims and will want to see that the claim has a solid legal foundation. You will find providers of litigation funding online by searching sites such as https://www.novo-modo.co.uk/litigation-funding.
Likelihood of Success
Each case must have legal merit and show a realistic prospects of success. Funders will expect your assessment of these with opinion from counsel if there is no solid precedent. It is useful to know the kind of cases the funder has accepted before approaching them.
Commercial Viability
Legal merit is a good starting point, but the claim must also be seen to be commercially viable. Funders will have their own cost-to-damages calculation, and you will need to meet that ratio in your claim. Costs may also be an issue if they coincide with a limited damages calculation.
Are the Potential Defendants Solvent?
Funders will need to be confident that the defendant is able to pay any damages which are awarded. Funders will look at the liquidity of the defendant in most cases.
Timelines
Funders will consider the potential length of a trial, since this may impact on their costs. They will tend to look at a quick resolution within, say, one to two years.
After the Event Insurance
Most funders will require a claimant to have After the Event insurance in place, known as ATE. This will be seen as a further endorsement of the merits of a case. Funders will require this insurance to be in place to mitigate risk.