A third party funding application has a twofold purpose. The first is to set out the client’s requirements, whilst the second is to enable a litigation funder to consider whether to make an investment in the claim.  As such, the application must tell ‘the story’ of the case, in addition to the providing a detailed budget, timetable and the key claim documentation.

Generally speaking, a successful application will demonstrate four key characteristics to the litigation funder:

• That the claim has legal merit (60% prospects of success or better)
• That there are no issues with recoverability. The other side must be assessed to have the means to pay, and funders will want confirmation that you believe full recovery is likely
• That the claim is capable of commercial settlement
• The cost of funding a claim must be proportionate to the ultimate claim value. A ratio of 1:8 (investment to damages) is a good benchmark

Tick all these boxes and you will probably be in luck, with QLP able to provide easy access to a third party funding market, as well as guiding you through the application process. Just give us a call.

Damage Based Agreements are a hot topic at the moment and as Brokers, we are having increasing numbers of discussions with firms exploring options and regulations.

For those that have not (yet) come across them, Damage Based Agreements offer an alternative basis of remuneration from the traditional fee paying model. Instead of paying on the basis of solicitor’s time, clients instead agree to give the lawyer an agreed percentage of their damages at the conclusion of the claim, with nothing payable if the case is unsuccessful.

For clients, the benefits are clear: no upfront (or ongoing) costs whilst pursuing their claim, the basis of remuneration is results rather than hours incurred, with the lawyer sharing in the risk of pursuing litigation and potentially losing the claim. As a consequence, many law firms are beginning to explore the competitive advantages of offering DBAs and a very different approach to litigation.

The agreed DBA percentage is known as the ‘contingency cap’ and is the maximum amount that the solicitor can retain. Therefore, the starting point is that if a claim is being run on a 50% DBA, (under statute, the contingency cap is set at a maximum of 50% for commercial litigation) the client is entitled to retain half of their damages. However, as with everything in life, it is not quite that simple. Costs are recoverable on the normal basis and are retained by the solicitor. The recovered amount is deducted from that owed by the client (50% in this example) to meet the agreed remuneration percentage – no double bubble if you will.

A few examples may help here! For ease, let’s imagine that a claim is being run on a 50% DBA, with quantum of £100k.

• If £30k of costs are recovered these will be retained by the solicitor, who will also receive the remainder of their agreed 50% from the client. Thus, the solicitor will receive their £50k and the client will be left with £80k (smiles all round)
• If there is a recovery shortfall and only £10k is recovered, this will again be retained by the solicitor with the remainder coming from the client’s damages. Therefore, the solicitor will receive their £50k and the client will only receive £60k
• Now imagine that £60k of costs were recovered and retained by the solicitor. As these exceed the agreed DBA percentage the client would retain all of their damages with nothing owed

Within their agreed share solicitors must budget their time costs and non-recoverable disbursements, and therefore firms must get their budgeting spot on or risk their margins against the cap.  It is here that QLP come in. Like knights to the rescue, our TPF and ATE solutions (from WIP funding for the firm to bespoke funding on a case by case basis) may help to mitigate the risks to law firms presented by DBAs, protecting cash flow. Talk to us to find out more…

Next week, QLP will be venturing down to Old Billingsgate (the site of the once famous fish market) to discuss all things funding and insurance at the NetLaw conference (come in and see us)

From one Market to another, you could say, as recent times have seen the emergence of the third party funding (TPF) market as a widely acknowledged method of financing cases. In fact, with an estimated £1 billion of funding available, the market is beginning to resemble Billingsgate in its prime; booming – though thankfully without the smell!

As Lord Jackson explained in his (infamous) review of civil litigation, the benefits of third party funding can be enormous. It provides an additional means of funding litigation and for some parties, the only means. It therefore promotes access to justice, helping claimants to overcome the cost and risk associated with litigation.

For many, the David and Goliath scenario will immediately spring to mind, however the role of third party funding is in fact much wider. Indeed, as the Association for Litigation Funders (ALF) notes: “the growth of litigation funding is to be encouraged as a means of ensuring access to justice by allowing corporations and others with meritorious claims to conduct litigation in a way that does not put undue strain on balance sheets.”

In the Post-Jackson era, the TPF market has also seen the development of the rules and regulations required by any market to ensure it remains attractive and efficient. An ALF code of conduct ensures the self-regulation of the market around three core concepts: Funders must ensure that they maintain adequate financial resources to meet their obligations, sourced from investors including listed companies, hedge funds and private equity entities. Secondly, funders must behave reasonably and only withdraw from agreements in specified circumstances, and finally, funders are prohibited from taking control of litigation or settlement negotiations.

In addition, funds are also provided on a non-recourse basis. In short, this means it is an investment in your client’s litigation. Should the case be lost, the funder loses their investment and nothing is owed by the litigant. If the case is won, their reward is either a predetermined percentage of the damages or a multiple of the funds advanced.

Despite this, and the clear benefits for both lawyers and clients alike, third party funding remains an underutilised market (there is plenty of fish left in the sea, if you will)

QLP can help you and your clients to take advantage of this, broking access to funds which in conjunction with ATE insurance, mitigate the financial costs, risks and disruption of any commercial litigation.

Visit us online, or on LinkedIn to find out more

In times gone by prophecy has been a big part of peoples’ lives as unforeseen events have always been feared as giving notice of disaster. Mark Blitz and John Hagee (for example) believe that yesterday’s super-duper Blood Moon foretells difficult and trying times ahead.

But, looking at other names for this particular moon, it has been known as the Harvest Moon since time immemorial and this is usually a good time, celebrated all over the world as such.

Looking through history we note that there can be up to 8 Blood Moons in a century and are we therefore in line for a 50:50 good & bad? From my point of view, I think the world is carrying on as it always has done, the good, bad and so-so. We just know about more, more quickly, remember bad news sells.

If I am wrong, it does not matter, it’s all over anyway.

For the nervous among you, you can insure against an Act of God, so why not give it a try?

(As for Mr Blitz & Mr Hagee, they are Christian ministers and the joint authors of The Blood Moon Prophecy an apocalyptic prophecy)

It’s a curious word, incidental. Originating somewhere in the 17^th Century with roots in Latin, it has a surprisingly wide range of definitions. Indeed, even a cursory ‘surf’ of the internet will come up with the following subtle variations:

• Less important than the thing something is connected with or part of
• Happening as accompaniment to something else
• Occurring by chance in connection with something else
• Happening as a result (of an activity)

This is not mere rambling, however. The reason that the word has been placed in the spotlight is that regulatory change has once again reared its (unwelcome) head, with the FCA taking over the regulation of consumer credit activities from the Office of Fair Trading. As a result, from 31 October an SRA-authorised firm will only be able to carry out regulated consumer credit activities (think credit brokerage, debt advice or debt collecting etc.) if the firm is authorised by the FCA to carry out this business or, in the alternative, the activity is an exempt regulated activity under Part 20 of the FSMA.

Now, there are a number of conditions to be met in order for an activity to be exempt, but the crux of the matter appears to be that the consumer credit activities are provided in a manner which is incidental to the provision of legal services to a particular client. So, back to the question, what exactly is incidental?

Attempts to arrive at an answer will no doubt lead to a lot of head scratching for lawyers up and down the land, as they attempt to come terms with the new regime. Of course, they could always succumb to the SRA’s useful suggestion that, due to uncertainties, most prudent firms would register with FCA in any case…

Those ‘prudent’ among you will be placed into either ‘higher-risk’ or ‘lower-risk’ categories and have a detailed application process for FCA authorisation to look forward to, probing for information regarding your business, its structure and financial resources. Oh, and there is a fee to be paid if you do make the threshold (of course!)