What is the right number of funders to approach for funding for your case?

There are at least 40 active litigation funders and the number steadily increasing with a number of hedge funders entering the market. What is the right number of funders for a litigator to approach to secure finance for a client’s dispute?

While there is no regulatory obligation on lawyers to seek multiple funding options for clients, the Solicitors’ Code of Conduct requires lawyers to advise on funding options and it’s also part of a litigator’s duty of care in cases where funding may be viable. Many litigators have close relationships with one or two funders.

This makes seeking funding a risky exercise for lawyers as funding agreements can be complex. There can also be a significant difference in ‘the cost of the money’ in the market and clients conceivably could turn on their lawyers if they don’t get the best funding deal and later have to sacrifice a bigger share of the end settlement.

This has happened with DBAs in Bolt Burdon Solicitors v Tariq & Ors [2016] EWHC 811 (QB) (see www.litigationfutures.com/news/london-firm-money-high-court-upholds-validity-contingency-fee-agreement),  Glasgow (the bankruptcy trustee of Harlequin Property SVG Limited) v ELS Law Ltd [2017] (see www.kennedyslaw.com/thought-leadership/article/dbas-in-contentious-litigation-damages-based-adolescence) and Lexlaw Ltd v Zuberi [2017].

Of course, just because there are numerous funders, that does not mean all or even most of them will be interested in your case.  For instance, firms such as Apex can fund smaller matters (for instance, those where funding as low as £30,000 is needed), Manolete Partners specialises in insolvency whereas, at the other end, firms such as Burford typically deploy a minimum of £5,000,000.

The common problem, litigators tell us, is that the process of applying for litigation funding is cumbersome and expensive. Each provider has its own investment criteria and its own due diligence requirements.

Navigating the market is time-consuming with forms often needing to be hand-written rather than typed, and the same information asked in several different ways by different funders, only to then find that a given funder doesn’t fund a certain type of matter. While larger firms can use junior lawyers for some of the task, few firms have this luxury and it is rare to find junior lawyers with sufficient knowledge to write a good funding application.

With big-ticket disputes the value of this effort is clear.  With smaller matters, however, the cost of seeking funding can quickly start to outweigh the time involved in seeking it. Indeed, with low value claims, many lawyers may not see it as worth the time to approach one funder, let alone several.

That is why we have created FINLEGAL.IO, the online marketplace matching lawyers with funders.

As with an insurance comparison website, it is one form filled in by following a straightforward process (complete with online explainers for those new to funding).  

Whether your case is big or small it allows you to efficiently test the market for your client without the prospect of having to fill out multiple forms adding dozens of hours to the workload.

We want to hear from litigators and funders about what else you would like to see on this platform. Register for our BETA programme to join others with early access to this ground-breaking platform prior to launch.