The volume litigation in the UK is set to expand at a significant pace due to the growing range of options to fund cases.

Since the demise of government funding, claims have only been pursued by claimants with very substantial financial resources or where their lawyer agreed to a no-win-no-fee arrangement, known as a CFA (Conditional Fee Agreement).

That is now changing by the day given the increase of funding options such as litigation insurance, third party funding and companies specialising in ‘buying’ litigation and which fund and pursue claims themselves.

According to industry forecasts, 2017 is set to be a record-breaking year for funded commercial disputes. Since its arrival in the UK from 2011 onwards, third party litigation funding has gradually become recognised as a key tool for many litigants pursuing often substantial damages claims.

Robert Hanna, Managing Director at Augusta Ventures, which specialises in finance for litigation, put it quite simply. In what we would regard as ‘David v Goliath’ cases, in particular, litigation is now ‘levelling the playing’ field and enabling companies and organisations to pursue cases they would not have been in a position to pursue previously.

His comments were echoed by Michael Lent of Lakehouse Risk Services who described the ‘huge potential’ that litigation insurance and funding now provided. He also highlighted how After the Event Insurance (ATE) was increasingly becoming ‘tactically useful’ for lawyers pursuing a claim to send a message of strength to the opponent.

While these two funding options are perhaps better known to lawyers, a third ‘shot in the locker’ is the emergence of companies specialising in buying litigation as a package which it will then pursue.

liligation-fundGwilym Jones of Henderson & Jones, a specialist firm which purchases existing litigation either for a price or a share of recoveries, mainly from insolvency practitioners, said they assume full control of litigation they buy. Whilst the roots of this concept go back hundreds of years, it is increasingly being understood and utilised by claimants and investors.

More flexible fee arrangement for lawyers will also enable more claims to be run. The current regime, whilst going some way to giving greater flexibility in laywers’ fee retainers, could benefit from further relaxation.

There are significant issues for lawyers to consider. For example, when is the best time to seek funding or insurance? Who is in control of the case, the funder or the lay client? However it is funded, a sound legal foundation will need to be in place for a successful claim.

We are moving into a new era. More cases are going to be pursued and legal remedies are not going to be solely the preserve of those with very deep pockets. As one expert said, litigation is a risk and reward calculation. The toolkit for claimants has become more flexible and forceful. That will certainly send a strong message to those who believe that protracting disputes and ‘toughing it out’ will win the day.
Georgina Squire is head of dispute resolution at UK-based law firm Rosling King