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| Glossary |
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Adverse costs - in litigation in the UK, the losing party in a claim has to pay not just their own costs but also those of the other side, or winning party. So each party has to consider how they will cover that potential expense.
Adverse costs or after the event insurance ('ATE') - this is insurance to cover the costs of losing a claim, for which a premium is payable. Insurance does not however cover the ongoing own side costs of litigation and is therefore complementary to litigation funding.
Arkin v Borchard Lines Ltd & Others (2005) - this was an important case in the English Court of Appeal that, amongst other things, made clear that litigation funding is a legitimate method of financing litigation.
http://www.hrothgar.co.uk/YAWS/reps/05a655.htm
Before the Event insurance - certain household or car insurance policies include coverage for legal costs for individuals - typically they state which solicitor the Claimant should use in the event of a claim and they cover own side costs to a fixed amount. This insurance is generally not available in commercial disputes.
Champerty and maintenance - these are ancient legal principles which state that a funder of a claim cannot control how the Claimant runs their case. There are some who think that this means funding is not permitted. That is not correct - properly run litigation funding is completely lawful. See Arkin and Civil Justice Council
Civil Justice Council ('CJC') - an Advisory Public Body established under the Civil Procedure Act 1997 with responsibility for overseeing and coordinating the modernisation of the civil justice system. It provides advice to the Secretary of State for Constitutional Affairs on the effectiveness of aspects of the civil justice system, and makes recommendations to test, review or conduct research into specific areas. http://www.civiljusticecouncil.gov.uk
In 2007 the CJC published a report recommending the acceptance of third party funding.
http://www.civiljusticecouncil.gov.uk/files/future_funding_litigation_paper_v117_final.pdf
Claimant - any claimant in a piece of litigation, arbitration or a tribunal claim. Harbour does not currently fund defendants to actions.
Conditional Fee Agreement ('CFA') - this is an agreement whereby a solicitor or barrister agrees to discount their usual fees in return for a success fee upon success in a claim - such fee being a factor of both the level of risk involved in the case and the amount of the discount offered. Expert witnesses may not operate on a conditional fee basis and must always be paid in full.
Contingency fees - this is a different type of success fee where typically the representative charges no fee throughout the life of the case but takes a percentage of the damages awarded to the Claimant when the claim succeeds. Like the 100% CFA, the representative working on a contingency fee recovers nothing in the event the case is not successful. Contingency fees are currently permitted in the Tribunals, but are not permitted in any High Court litigation. That position is currently under review by the Ministry of Justice.
http://www.justice.gov.uk/consultations/docs/regulating-damages-based-agreements.pdf
Deed of indemnity - because ATE insurance is not usually deemed adequate security for costs (see below) in its own right, a Claimant may well have to purchase an additional level of cover, or deed of indemnity, to satisfy the defendant that its costs will be paid in the event the claim fails
Law Society Code of Conduct 2007 s2.03 - since the introduction of this section of the code, Solicitors have been obliged to consider the question of how their client pays their fees and therefore discuss with them funding options available to the client to pay for those costs, including third party funding: http://www.sra.org.uk/solicitors/code-of-conduct/195.article
The complete Code of Conduct can be found at:
http://www.sra.org.uk/solicitors/code-of-conduct.page
Loss of opportunity claims - a claim where the entire value of the claim is based on a speculative future loss which the Claimant states the defendants’ actions prevented him from making a profit or otherwise gaining an opportunity. The value of these claims is often uncertain.
Security for costs - under the Civil Procedure Rules, a defendant is entitled to apply for security for his costs where he can show a corporate Claimant has insufficient assets to satisfy a costs payment if the claim is unsuccessful, or the in the case of an individual Claimant, that the individual is not resident in this jurisdiction. The most straightforward way of providing security is to pay money into court. ATE insurance backed by a deed of indemnity is also a good alternative.
In each case the court will examine the adequacy of the proposed security to be provided. In Harbour's experience, ATE insurance on its own has never been deemed adequate security for costs so will always require either a deed or monies being paid into court.
http://www.justice.gov.uk/civil/procrules_fin/contents/parts/part25.htm#IDAKNLCC |
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