A Comparison: Litigation Finance in England and Wales
Litigation funding by third parties has been a part of the English and Welsh legal systems for quite some time now. The foundation was established through Legal Aid in England in which the government provided funding to individuals so that everyone had access to the courts. Through a series of regulations and legislation the system today looks a little bit different, as legal costs have increased there have been cuts and reductions in the system. But that foundation is quite similar to what organizations like TownCenter Partners try to do for individuals, allowing everyone access.
Today, there are about 11 principal litigation funders in the UK. Each of these organizations has slightly different business and funding models. Allianz Litigation Funding, a branch of the German Allianz Insurance Company, handles each investment on a case-by-case basis with some variance terms even based on the cost-reward ratio. Whereas, Therium works by investing in law firms and their handling of a case, primarily focusing on building law firm relationships.
There is no standard litigation-funding fee across the market and each agreement may have slightly different terms, as there is no industry standard. Many of the funders in the UK market agreed that while the idea of litigation funding has existed in some form for a while, the market is still maturing. Funders have not yet fully embraced the idea of competing on price like insurers do.
Similar to the US system, funders highly value the change of success in deciding whether or not to invest. UK funders said they want to see a chance of success of at least 60%. But its not only the chance of success that the funders consider, they are also looking for meritorious cases, that would result in the enforcement of a legal right. Funders noted that most claims require initial investigations on the evidence and merits before they will discuss potential funding. This is in an effort to establish a high level of confidence in both the legal team and in the case.
Once litigation funders are involved many take a laissez-faire approach to the case. Allowing the legal team and client to handle the case. The separation of roles and responsibilities is a healthy way to handle any potential conflicts that could arise. This is another similarity to how cases are handled in the US system. However, UK funders noted that the funder has a contractual right in most cases to retract their involvement at any stage of the case. Ultimately, there is a Code of Conduct for Litigation Funders written by The Association of Litigation Funders of England and Wales that governs funders.
Topics: litigation finance, alternative litigation finance, third-party funding, legal system reform, England, Wales, U.K., international
Works Cited: Christopher Hodges, John Peysner, and Angus Nurse, Litigation Funding: Status and Issues, (January 2012) https://www.law.ox.ac.uk/sites/files/oxlaw/litigation_funding_here_1_0.pdf
