Answers to the questions raised during our recent webinar about Insolvency Funding Litigation by Maurice Power

Whether you have already listened to the webinar or intend downloading this from talk insolvency in due course, below are the questions and answers from that webinar. 

 

What about assignment with a share of the proceeds being returned?  

This is always an option. The benefit for the funder is that the IP/Claimant has an interest in a positive outcome to the action, and is likely to be engaged in the process. The downside for the IP/Claimant is that, although they will receive an initial upfront payment, the total recouped following a successful conclusion is likely to be considerably less than if they retained the claim and just sought funding.

 

What is the appetite to part fund litigation? E.g. there are material funds in the estate but the IP either doesn't want to put all at risk or seeks to part match the estate funding? 

I cannot speak for the other funders, but Ferguson Litigation Funding Ltd will consider all approaches to providing a funding solution that works for all the interested parties. Part funding, or disbursement only funding are certainly solutions that we are comfortable in delivering.

 

What would be the lowest value of a claim that you would look at? 

It is difficult to provide a numerical answer to this question however, the smaller the claim, the less likely there is enough money in the pot to make it worthwhile for all parties to consider funding. To date, the lowest value claim that we have offered a funding solution on is £40k.

 

Do you have any case studies of cases Ferguson funded and how they turned out? 

I am not at liberty to discuss individual cases, due to non-disclosure commitments. However, I can report that Ferguson Litigation Funding Ltd are yet to lose a case that they have funded.

 

If Lawyers are acting on a CFA basis and the ATE insurers are deferring premium then what are you funding? 

All other areas of the action; e.g. Counsel’s costs, Court fees, expert witness costs, general disbursements, etc

 

Given your survey results, is there a move towards case purchase rather than financing the case? 

The survey revealed that more IPs are willing to consider assignment of cases than in the past. As with most funders, our preferred route is to fund the action so that all the interested parties interests are aligned.

 

Your survey suggests that there will be increase in assignment of office holder claims as a result of LASPO, but was this not increasing anyway? What do you perceive as the risks in this, particularly as regards costs orders? 

I believe the true risk here is the diminishing returns to creditors. When an IP “sells”/assigns a claim to a third party, it is normally for a fraction of the true value of that action. An IP needs to be sure that they are acting in the best interests of the creditors when taking this course of action and not leaving themselves exposed to future claims of disposing of an asset (the claim) at undervalue.

 

How do you calculate your success fee when making an offer of funding? 

This can be on a percentage of net returns or multiple of investment but will be based on a number of factors on a case by case basis that we can discuss with the client. We never lose sight of the fact that the client/claimant needs to extract value form our involvement, therefore our quotes ensure that our interests are aligned with those of the client/claimant and reflective of the risk present in the action.

 

Do funders insist on the use of a particular ATE insurer / solicitor? 

When a claim is presented to a funder, a law firm has already been instructed by the IP/claimant. It is not within our interest to question the choice of law firm, unless the handling of the case and potential successful outcome are jeopardised by the actions of the solicitors. We have no preference as to which ATE provider is used, however we would require sight of the policy to ensure that it provides adequate cover.

 

I have had a previous poor experience when approaching a litigation funder. Why should I consider using them now? 

I apologise on behalf of the industry but please don’t be perturbed. Litigation funding is an evolving market and, although I cannot speak to your experience, I can assure you that customer satisfaction and communication are at the centre of everything that we do. In many cases litigation funding can be the only means to pursue a case and allow you to satisfy your investigatory and SIP 2 obligations, so working with a funder that understands your requirements, and delivers the service you expect, is paramount.

 

Maurice Power is the Managing Director of Ferguson Financial Limited and can be contacted on +44 (0)7817 061 464 or at maurice@ferguson-financial.co.uk

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