Litigation funding serves as a sanity check and improves access to justice.
Here’s an explanation of some of the language and terminology encountered in a litigation situation.
in litigation in the UK, the losing party in a claim has to pay their own costs and 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 complementary to litigation funding.
Note that Harbour can introduce ATE providers.
A form of alternative dispute resolution, a method for the resolution of disputes outside court, where parties in a dispute refer it to one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), by whose decision (the "award") they agree to be bound. A third party reviews the evidence in the case and decides what is legally binding for both sides. Commercial disputes often use Arbitration for resolution, particularly in the context of international commercial transactions.
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.
Association of Litigation Funders (ALF)
The membership association for all litigation funders launched in November 2011. Harbour is the founder member of ALF and its Code of Conduct.
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. Champerty and maintenance do not restrict litigation funding, which is supported by case law and in public policy statements. See Arkin, the Civil Justice Council and Chapter 11 of The Jackson Report.
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.
In 2007 the CJC published a report recommending the acceptance of third party funding.
Civil litigation is a legal dispute between two or more parties that seek money damages or specific performance rather than criminal sanctions. A lawyer who specializes in civil litigation is known as a “litigator” or “trial lawyer.” Lawyers who practice civil litigation represent parties in trials, hearings, arbitrations and mediations before administrative agencies, foreign tribunals and federal, state and local courts.
Any claimant in a piece of litigation, arbitration or a tribunal claim. Harbour does not currently fund defendants to actions unless they have a good counterclaim.
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 if the claim is successful and monies are recovered.
The success fee is determined by both the level of risk involved in the case and the amount of discount offered. Expert witnesses may not operate on a conditional fee basis and must be paid in full.
This is a different type of success fee where 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 if 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 and it is possible that contingency fees will be permitted if certain legislation is enacted in April 2013.
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 if the claim fails
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 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 examines the adequacy of the proposed security. In Harbour's experience, ATE insurance alone has never been deemed adequate security for costs so requires either a deed or monies being paid into court. Harbour can cover both alternatives.