Key drivers of growth in litigation funding

Law firms identify the Financials Services sector and risk management as key drivers of growth in litigation funding in the UK

14 October 2015
Therium, a leading UK based litigation funder and Just Costs Solicitors surveyed 101 commercial litigation partners at the UK’s top 200 law firms on the adoption of litigation funding in the
UK. The survey highlights included:

  • The vast majority of litigation partners (79%) saw new funded litigation cases in the last 12 months.
  • Funding was most prominent in cases involving the Financial Services sector (26% of total ranked responses), followed by the Industrials (16%) and Energy and Natural Resources (14%) sectors.
  • The ability to meet costs (23% of total ranked responses), risk management (21%) and cash flow (18%) were highlighted as the most important benefits of third party funding for clients.
  • Nearly 70% of litigation partners are having more discussions with clients about alternative fee arrangements than in the previous 12 months, and three quarters (76%) are discussing funding as an option in all cases, following the Jackson reforms of 2013 and reflecting client demand to reduce cash investment in dispute resolution.
  • However, solicitors prefer being paid on a restricted basis, entering into a fixed (30% of total responses ranked by preference), or capped fee arrangement (23%), over risk sharing with clients through a Conditional Fee Arrangement (20%) or Damages Based Agreement (12%). The lack of interest in DBAs is largely due to how they are regulated and uncertainty regarding their enforceability.

Neil Purslow, Chief Investment Officer of Therium, said: “Therium has seen a significant increase in funded cases in the last year, particularly in our focus areas involving financial institutions, industrials, energy and natural resources. This experience, which we expect to continue, is reflected in the results of the research which shows clients increasingly looking to funders to provide financial resources and share the risk of their litigation and arbitration in those sectors.”
Purslow added: “It’s interesting to see that the ability to meet costs, risk management and accounting benefits are closely ranked as benefits. From the perspective of big corporates, we are tending to see that while they are able to meet the costs of disputes in many cases, the key reasons they turn to third party funding is the risk sharing with the funder and accounting benefits, such as not having to lock working capital into a lengthy litigation.”

Mark Hartigan, Client Services Director at Just Costs Solicitors, said: “Cost management of disputes following Jackson’s reforms has become an increasing focus for parties in arbitration and litigation situations, both funded and unfunded. We continue to see a growing demand for our cost analysis and budgeting services, in complex global situations, through to small local matters.”

About Therium Capital

Therium is one of the most established litigation funders with a market leading track record of generating superior returns for investors. In April 2015, Therium secured an additional £200 million to invest in group litigation, large scale commercial litigation and arbitration globally. The fundraising is believed to be the largest single investment in the litigation funding sector to date. Headquartered in London, Therium has consistently been at the forefront of innovation in litigation funding, pioneering the use of insurance and being the first to launch a portfolio funding model in the UK. The firm’s ability to develop innovative funding arrangements compliments its rigorous approach and experience of funding a wide range of claims across
different jurisdictions.
Clients praise this discipline and welcome direct contact with Therium’s key decision makers at each stage of the funding process. Therium was launched by a team of lawyers in 2009 and is a founding member of the UK based Association of Litigation Funders.

About Just Costs Solicitors

Just Costs Solicitors is the UK’s leading solicitors’ practice specialising in costs. As highly skilled law costs draftsmen, our commercial team provides nationwide coverage and works closely with a broad range of clients including magic circle, niche and regional practices. Whether your case is a multi-million offshore oil exploration dispute, relates to the largest explosion in peace time Europe, a collision or salvage at sea, or a simple breach of contract, Just Costs Solicitors is ready to provide an all-round service. Regulated by the Solicitors Regulation Authority (SRA), Just Costs Solicitors has professional indemnity cover of £10 million.

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