What Are Litigation Funding Agreements?

Summary

For those involved in a legal dispute, the prospect of hefty legal costs and solicitors fees might make you hesitant to seek justice. However, there are ways to mitigate financial risks and costs, including litigation funding agreements. Litigation funding as allowed by law in the UK. In England and Wales, the Jackson reforms recognised that litigation funding helps people afford to take legal action. The Association of Litigation Funders has a code of conduct that sets the rules for how funders should act. For example, In the UK, litigation funders can’t control the cases they support, interfere with settlements, or make lawyers break their professional rules. It's also the responsibility of lawyers to discuss with their clients the different ways to pay for a case, including litigation funding. Litigation funding agreements are arrangements where a third-party funder pays a litigant’s legal expenses in exchange for a portion of the damages awarded if the case succeeds. 1. No Win, No Fee: This means you won’t have to pay your solicitor’s fees if you don’t win the case. 2. Third-party funding: This means another party provides the funding for your legal expenses in exchange for a.

Key information

• •For those involved in a legal dispute, the prospect of hefty legal costs and solicitors fees might make you hesitant to seek justice. However, there are ways to mitigate financial risks and costs, including litigation funding agreements.
• •In England and Wales, the Jackson reforms recognised that litigation funding helps people afford to take legal action.
• •The Association of Litigation Funders has a code of conduct that sets the rules for how funders should act. For example, In the UK, litigation funders can’t control the cases they support, interfere with settlements, or make lawyers break their professional rules.
• •It's also the responsibility of lawyers to discuss with their clients the different ways to pay for a case, including litigation funding.
• •Litigation funding agreements are arrangements where a third-party funder pays a litigant’s legal expenses in exchange for a portion of the damages awarded if the case succeeds.
• •1. No Win, No Fee: This means you won’t have to pay your solicitor’s fees if you don’t win the case. 2. Third-party funding: This means another party provides the funding for your legal expenses in exchange for a share of the outcome if you win.
• •Litigation funding agreements (LFAs) are designed to help you finance a court claim against someone, whether it’s a person, company, or other legal entity.
• •As long as the arrangement meets your solicitor’s requirements (i.e. they get paid) and is within the bounds of the law, it’s considered a litigation funding agreement.
• •You can set up a litigation funding agreement directly with your solicitor. This may involve agreeing on a fixed fee cost for a specific stage of the case, a particular task, or a certain period. Alternatively, it might be based on your solicitor’s assessment of the case’s chances of success (a conditional fee agreement) or as a percentage of what you recover (a damages-based agreement).
• •Alternatively, you can make arrangements with third-party financial institutions. They might agree to cover your solicitor’s cost at their usual rates but take a share of the winnings in return.
• •For individuals looking for funding, it’s important to ask if the funder has their own money or if they’re just middlemen. Middlemen can make things slower and more complicated they have to gather money from different places for each case.
• •In July 2023, the Supreme Court made a significant ruling regarding litigation funding agreementsBill\(HL\)#:~:text=The%20Supreme%20Court%20ruling%20rendered,%2Dbased%20agreements%2C%20or%20DBAs.), declaring that under certain circumstances an LFA could be classified as a damages-based agreement. This ruling added a layer of complexity to LFAs, as damages-based agreements are subject to distinct legislative requirements.

Practical guidance

• •Source: [What Are Litigation Funding Agreements?](https://lawhive.co.uk/knowledge-hub/find-a-solicitor/what-are-litigation-funding-agreements)

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