FAQ: Dispute Resolution

Q. My business received some professional advice that turned out to be wrong. It has cost us a significant amount of money to sort the situation out. We would like to bring a claim through the courts to recover our losses, but I am concerned about the cost and risk of taking legal action. Is there a funding solution that could help?

A. Funding disputes can be a challenge. For many businesses it can prevent access to justice. Even where funding can be supported, however, there is always a risk, no matter how small, of an adverse costs order which simply could not be justified.

In recent years law firms have started to work with litigation funders to help businesses meet the cost of bringing a claim, which they cannot afford to run, or to risk losing.

The starting point is the same as for any dispute – does your case have a good chance of success, and can the opponent afford to pay the amount of your claim and costs? If the answer to both of these questions is yes, litigation funding and costs insurance could be available.

The way such schemes work is relatively simple:

• Solicitors will work under a Partial Conditional Fee Agreement (PCFA) meaning that usually, around 60% of their fees are paid as the case progresses and 40% are only paid if the case is successful.

• Typically you would have to pay half of the 60% PCFA fees as the case progresses. The other half would be paid by the litigation funder, as well as all of the other litigation costs, such as court fees, barrister’s fees, and expert’s fees.

• The litigation funder will arrange insurance to cover your liability to pay the opponent’s costs, should the claim fail. The insurance would also cover most of the costs you have paid under the PCFA.

• This means your overall costs risk would be about 2% of the cost of pursuing the case, as opposed to the normal risk of having to pay all of your own costs and around 70% of the opponent’s costs, if the claim is unsuccessful.

• If you are successful, you will end up with approximately 70% of the damages awarded at trial, or any settlement sum negotiated. The remaining 30% is usually sufficient to cover the deferred PCFA costs and all the costs of the litigation funding.

This form of litigation funding means you can continue to run your business while still pursuing a damages claim, knowing that there is little cashflow impact and the downside risk is reduced to as little as 2% of the total costs of bringing the case.

You would need to work with a specialist law firm and expert litigation funder, both of whom will share in the risk and cost of pursuing your claim.

Thomson Snell & Passmore have partnered with Augusta Ventures to provide such a litigation financing solution.  Augusta Ventures is a unique litigation funder targeted at the SME market, and typically provides funding of up to £600,000 per case.

It has retained a panel of expert lawyers, economists and financiers to ensure that in conjunction with partner firms like Thomson Snell & Passmore, they can provide you with the best possible litigation funding solution.

If you would like to discuss the issues detailed above please contact Douglas Skilton, Partner, 01322 623715.