Author: Alex Hall

The costs of litigation often drive a party’s approach to litigation, regardless of the legal merits. We do not think things should be that way.


We will work on traditional “hourly rate” models if that suits you, but we will always consider sharing the risk (and rewards) with clients too. For example, we have considerable success acting at lower hourly rates, with an uplift (mostly, or entirely, recovered from opponents) in the case of a win. Or we can agree payment purely based on what we recover for you, if the case warrants that.


Brandsmiths have access to market leading policies and will help you pick the right funding model for each case. Some popular examples are considered in more detail below.

BEFORE THE EVENT INSURANCE

Many private insurance policies, such as home and car insurance policies, contain elements that cover the costs of certain types of claim. Insurance policies held by your business are no different. We can work with you to assess if a BTE insurance policy will cover the costs of your claim.

AFTER THE EVENT INSURANCE

These are policies purchased to cover a variety of legal costs. They might cover some or all of the following:

• Your own legal costs.
• Disbursements, such as court, counsel and expert fees.
• Opponent’s legal costs in the event that your claim is unsuccessful.

Some policies will be based on fully deferred and fully contingent premiums. Combined with one of our innovative funding arrangements, this can mean running a case on a fully insured basis, with no premium payable if the case is lost.

For other claims, clients may prefer to pay insurance premiums up front, or staged payments as the case continues. Such policies cost less but the cost of those premiums may be lost if the case is unsuccessful. Policies with hybrid premiums, paid part up-front and part contingent, with or without some staging, are also available.

LITIGATION FUNDING

The litigation funding market has grown substantially in recent years. Rather than an insurance-based solution, a specialist funder will pay the costs of your claim as it progresses. In effect, you transfer the risk of litigation costs to the funder, in return for them taking a percentage of damages.


Brandsmiths have considerable experience working with litigation funders and can advise on your options. Funding comes with a hefty price tag, reflecting the transfer of risk to the funder. Litigation funders are repaid out of the proceeds of the claim, usually calculated as either a multiple of the funding put in or a percentage of the damages, often whichever is the greatest of the two.

CLAIM PURCHASING

Certain funders will purchase claims wholesale, in a similar way to invoice factoring. Whether this is possible depends on the type of claim. Such an approach is particularly popular in the insolvency sector, where a liquidator (or administrator) is permitted by statute to assign claims to a third party.

Such an arrangement transfers risk away from the liquidator, who may otherwise be reluctant or unable to pursue a claim on behalf of the creditors. The premium paid by the funder to acquire the claim may be fixed, or may be set as a percentage of net recovery.

NEXT STEPS

If you would like to discuss funding options in more detail, or if you are considering your costs options to pursue litigation, please contact Alex Hall (alex@brandsmiths.co.uk) or Michael Forrester (michael@brandsmiths.co.uk).