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Fund or no Fund......?

View profile for Nick Stockley
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Noel Edmonds is going to be starting legal action, we know this because he has recently issued a statement whereby he expresses his gratitude for a “white knight” stepping in and help fund the multi-million pound claim that he will be starting.  The immediate question may be: “did he only get the funding because of his celebrity status?”. The answer to this question is , essentially, no.   A 3rd party funder will back a party to litigation if they think that the claimant has a good case. The funder is, generally, not going to simply back a party to litigation out of the goodness of their own heart.  3rd party funding has started to grow in popularity following numerous changes to the rules surrounding no win no fee claims.

A 3rd party funder will back a party to litigation on the basis that the funder will take a percentage of the claimant’s winnings at the conclusion of the trial. The fund will pay the claimant’s lawyers’ fees in the first instance and will, most likely, pay the insurance premium which the claimant will take out in order to protect themselves from paying the other side’s legal fees if the claimant loses. This also begs the question whether a funder will only back a sizeable claim whereby a percentage of the recovery will be sizeable.

If the claimant wins then he will, most likely, recover a significant proportion of his legal costs back from the other side, as well as his damages. Therefore, the funder will recover a proportion of the money that they spend on lawyers and then a proportion of the overall damages awarded by the court. This all sounds a healthy situation, but the funding will, inevitably, depend on the strength of the case that they back. In short, the funder is most likely to only back a case which has a very good chance of success. 3rd party funding can be used in theory in any case but , as with  no-win no fees, it is most likely only going to be available on very strong cases. Furthermore, it may well only be available for sizeable claims and not for the unpaid invoices, the building disputes or an argument over a fence-line. Lest we forget, Mr. Edmonds is suing for losses in the millions!

The funder also has to factor in the risk of losing. As any litigator will tell you, there is always a risk of losing in litigation because of the inherent nature of legal disputes. If the claimant loses, then the funder, in the absence of insurance, will find themselves liable for the opponent’s legal costs and so it is not a decision that the funder will take without great care and attention. This suggests that both Mr. Edmonds, his lawyers and the funder have great confidence in his chances and it will be interesting to see how that plays out.  

Our litigation team can advise on all aspects of litigation funding and we are always flexible in trying to find a funding solution for our clients.  For more information, please contact me.

 

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