ENGLAND & WALES Law and Practice Contributed by: Damian Taylor, Olga Ladrowska, Lawal Ijaodola and Eleanor Higginson, Slaughter and May
2.3 Third-Party Funding for Plaintiff and Defendant Third-party funding is, in principle, available to both claimants and defendants. However, in practice it tends to be offered primarily to claim- ants (or defendants with a counterclaim), as the funder’s return will be taken from any award of damages or settlement amount in the claimant’s favour. 2.4 Minimum and Maximum Amounts of Third-Party Funding There are no set maximum and minimum amounts that a third-party funder will fund. Each funder will make its own assessment of a case’s merits, the potential quantum of damages, the potential costs of litigating the case and the potential adverse costs liability. The funder will typically consider these questions in the context of its own portfolio, cost of funding, risk appetite and target rate of return. It will then formulate a funding proposal accordingly. 2.5 Types of Costs Considered Under Third-Party Funding A third-party funder will usually fund all legal expenses associated with the claim and its enforcement that are incurred from the date of the funding agreement, including the costs of lawyers’ fees (including both the solicitor and barrister teams), any disbursements and any tri- bunal or court fees. Any liability on a funded party to pay its oppo- nent’s costs in the event the claim fails will usu- ally be the subject of a specialised insurance policy. That insurance policy will usually be acceptable as security for an opponent’s costs. 2.6 Contingency Fees Two types of contingent or conditional fee arrangement (ie, agreements between a litigant
and their lawyer specifying that legal fees will only become payable in certain circumstances) are permitted in civil litigation. Both are regu- lated by statute, and arrangements that do not comply with the relevant rules will generally be unenforceable. • Conditional fee agreements (CFAs) are made between a litigant (either claimant or defend- ant) and their solicitor. In its purest form, a CFA provides that a solicitor becomes enti- tled to payment for their work only if a thresh- old of success (however defined) is met; otherwise, the solicitor receives nothing. In practice, most CFAs are structured more flex- ibly, so that a litigant pays their solicitor at a discounted rate throughout the life of a case. If the success threshold is met, the solicitor becomes entitled to top up their fees to the undiscounted rate, plus a success fee of up to 100% of the undiscounted rate. • Damages-based agreements (DBAs) are made between a claimant and their solicitor. The solicitor’s entitlement to payment arises only if the claim succeeds, and their payment is calculated as a percentage of the damages award or settlement payment (subject to a cap of 50%). In practice, the flexibility of CFAs makes them significantly more common in the market than the more restrictive DBAs. 2.7 Time Limit for Obtaining Third-Party Funding There are no formal time limits within which third-party funding should be obtained.
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