3 things you need to know about how to draft a funding request
Securing litigation funding for your clients’ case can be a lengthy and expensive process, and it is even more difficult if you are a newcomer to the industry. Each funder has its own set of criteria for lending and each has its own distinct application process and underwriting criteria. Your firm/lawyers need to understand how to draft a funding request, so they have a better chance of securing a funding deal in a timely manner.
In recent months we have been speaking to scores of funders about what they want from lawyers who apply for litigation funding. Here’s what we have learned about how to draft a funding request.
1. Assess the costs of the managing the case
Start with the economics of the dispute: what will it cost to run the case to a full trial? Can this be prepared in a Form H costs budget? To what extent will the case be financed by the law firm if it is working on a discounted conditional fee arrangement or damages-based agreement? What are the additional disbursements, does this include costs like e-discovery or counsel fees? What is the level of funding your case requires?
2. What are the economic prospects for the dispute?
Funders will want to know about the financial prospects for the dispute so you will need to calculate the merits of liability for your case.
What is the likely financial quantum when you consider causation, loss and damage? What are the settlement parameters of the case? Will the likely quantum be enough to repay the funder’s capital and return, as well as any uplift owed to the lawyers? How much is then left in damages after lawyers and funders are paid? How does the figure change from bottom line settlement early on in the case to a top line win at trial?
3. Supporting evidence for your claim
Funders also want to know that your dispute has a reasonable chance of success, after all they need to make a return on their investment. To demonstrate the merits of your clients’ claim you will need to share the evidence you have to support it. You will also need to explain what further evidence needs to be gathered and how you intend to bring it together. What are the uncertainties about the evidence and what risks does this pose to the likely outcome of the case? Understand the law and its impact on your dispute
As well as the financials involved with the dispute, you will need to tell funders about the position of the case so far as the law is concerned. Are there other disputes of law that could affect your case? Are you awaiting another court judgment from a higher court that could have implications for your chances of success?
There is no sure way to guarantee that your efforts to secure litigation finance will be successful, but we can help make the process less onerous.
We have created FINLEGAL.IO to help lawyers approach a range of funders simultaneously using one straight-forward form to get the best possible terms. We also have plenty of online explainers to help guide you through the process.
To sign up and receive further information about the new forum for securing external litigation funding from a range of providers, simply click here.