Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
With over 30 practice areas, we have all bases covered. Find out how we can help
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Regulatory, business information and analytics solutions that help professionals make better decisions
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Discuss the latest legal developments, ask questions, and share best practice with other LexisPSL subscribers
Charting the complex world of litigation funding can be tricky, not least because the insurance market does not stand still. Here Matthew Amey looks at the five most common errors lawyers should avoid when arranging litigation funding.
One of the most common reasons for a funding application being rejected is the lack of visibility over the collection on any award in the claimant’s favour. Some lawyers put huge amounts of effort into convincing underwriters about the merits of the case without providing any visibility on enforcement. Evidence of assets and a viable strategy for enforcement (things like timescales, procedures and the budget post-award) should be a high priority when a lawyer makes an application.
These are two different issues but they are connected.
Funders do not relish the idea of being asked to fund cases previously rejected by other funders. They prefer to be the first to look at a case, and also, to be the only one looking at it. This desire, whilst commercially understandable from the perspective of the funder, is not wise from a client’s perspective in the absence of a very compelling reason to narrow a search to one provider. All funders ask for details of any prior rejections so approaching funders one-by-one can be hugely prejudicial. A lawyer should approach a number of funders simultaneously.
Similarly, with requests for exclusivity, lawyers shouldn't abandon a competitive tendering process too readily and in the absence of a very compelling reason in the client’s best interests.
Funders (and ATE insurers) want to understand who else will be sharing the upside and downside in the case. Lawyers need to be ready to field questions from funders on their willingness to share the risk, whether through a CFA or DBA.
It is not just questions about risk but rewards too. Funders worry about quantum. A CFA or DBA success fee that is staged by reference to the level of recovery instils confidence. If a lawyer cannot or will not share risk, a pre-prepared explanation of why the funder should not find that worrying is advisable.
Since the recoverability of CFA uplifts and ATE premiums were abolished, cases need to have enough value for the Claimant to be able to deduct any CFA uplifts or ATE premiums from the proceeds whilst still leaving them enough damages i.e. enough to make the whole litigation process worthwhile for the Claimant.
Some lawyers find it hard to adjust to the new economic realities of funding litigation after LASPO, especially in cases where the level of legal costs exceeds the level of the potential proceeds. Funding such cases is very difficult, if not impossible.
This last of the top-five common errors, is more a long-term mistake made by individual lawyers and sometimes firm-wide.
Activity such as settling cases by disclosing quotations from interested funders (and insurers); making applications far too close to trial; applications immediately following a clearly adverse development and making applications following prior rejections from a preferred funder are all evidence of what is known as “adverse selection”.
Evidence of adverse selection has a cumulative impact on the reputation of a fee earner and the firm they represent in the funding market which, over time, can lead to blackballing and a demonstrable reduction in the lawyer’s ability to source good quality offers for clients.
Matthew Amey is a Director of TheJudge – Independent litigation insurance and funding brokers.
 following the Legal Aid, Sentencing and Punishment of Offenders Act from 1st April 2013
Access this article and thousands of others like it free by subscribing to our blog.
Read full article
Already a subscriber? Login
0330 161 1234