When to Apply for Litigation Funding

Timing is critical and generally funding needs to be applied for at different stages of a case’s development. This means that by the time a funding agreement is entered into, the application has been through a first stage of assessment to establish the claimant’s case has merit.

Once Merits Are Reasonably Clear

Wait until once your solicitor says that a claim has merits. Funding can then be arranged for the pre-action work (i.e. before proceedings are issued). This work would include the issue of letters before claim, the gathering of early evidence and other work necessary to put the other side’s solicitors on notice that a claim will be issued. This early stage is often the most difficult for a claimant to fund.

When The Other Side Disputes Liability

As parties move through the pre-action protocol stages of a dispute, it may become clear that liability is at issue and the case will not settle within a short period of time. As costs are likely to escalate in such circumstances, application for funding can be made at this stage.

When Disbursements Fall Due

The disbursements such as expert reports, the opinion of counsel and the cost of issuing applications for court can fall due at any time. However, a claimant can apply for funding at the time a specific disbursement is due to fall and the claimant does not have sufficient funds to meet the cost of same. Typically such disbursements can be itemized and dated and therefore differ from disbursements that are estimated.

Ahead Of A Major Cost Milestone

The costs associated with disclosure and the preparation for a trial can be high and typically fall in clusters. By applying for funding prior to these costs being incurred a mid-case funding crisis can be avoided. Funding can be arranged within weeks rather than days and your solicitor’s team of instructed and regulated solicitors by the Solicitors Regulation Authority will advise on the appropriate time for an application for funding in relation to these milestones.

When A Settlement Offer Arrives Early

A strong offer made on a claim can put a Claimant under so much pressure to accept a lower offer than they deserve for their claim, especially if they haven’t got any cash to continue with their claim. Funding a claim through litigation funding allows a Claimant to continue with a trial of their claim, which they may have otherwise discontinued due to cash pressures.

Early Versus Mid-Case In Long Disputes

The timing of the application in long running disputes is another important consideration. Claiming Litigation Funding at the outset of a dispute could result in a higher cost of funding due to the greater uncertainty of the value of the case at the outset. Applying for funding in the middle of a case could result in a better price for the funding of the claim, once more is known about the case. However, the claimant must have already found funding for the early stages of the case and spent that money before applying for funding in the middle of the case.

Alongside Adverse Costs Cover

Likewise it is usually sensible to look to raise both litigation funding and insurance against the other side’s adverse costs at the same time, using the same set of case documents. Some of the leading funders only offer finance on this basis and it is certainly easier to get the best terms and get the process to close as quickly as possible if you raise both at the same time with the same solicitors.

Once Strength And Quantum Are Reviewed

Funders need to assess the application from a claimant for Litigation Finance once an initial review of the claim’s strength and quantum (i.e. likely value) has been carried out by the solicitor. As legal services are classified as ‘services’ under the Competition legislation, the market practices affecting legal services and funding arrangements have been looked at by the Competition and Markets Authority. Third party funding of litigation is treated as a ‘financial activity’ by the Financial Conduct Authority under their guidance and it is an area that is currently under scrutiny.

It is crucial to be able to identify where your case is up to and what is likely to be the cost of getting to the next stage.