Third Party Litigation Funding

 

21st January 2009

There has been a significant amount of publicity recently about the rise of third party litigation funding in the UK, including how the concept has found favour with many of the leading litigation firms in London.  Just last week, Reuters reported that ILF, the commercial litigation insurance broker, and IGS Group, an independent advisory firm, have formed a joint venture - Independent Litigation Funding - that proposes to raise £160 million in up to eight new funds this year dedicated to litigation funding.  Specifically, the joint venture will focus on funding mid-sized corporate claims before the UK courts, with a typical value of between £500,000 and £3 million.  See here and here.

 

This may be the first of many such ventures to be launched this year, aiming to take advantage of the current turmoil in the financial markets and the deepening recession.  The current financial environment provides a double "opportunity" for third party litigation funders in terms of the availability of an abundance of claims to fund, and an availability of potential investors seeking new investment opportunities.  One key issue facing this fledgling market, at least as far as funding claims before the UK courts is concerned, is the approach adopted in the UK towards regulating the conduct of claims by third party funders.  An important aspect of this is the degree of control over the litigation that can be exercised by the funder without falling foul of what remains of the rules of "champerty" and "maintenance".  The time is fast approaching when some guidance will need to be forthcoming on the issue. 

We will be posting regular updates on third party litigation funding, including the emergence of new players in the market, and any significant decisions from the UK courts.