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Date of publication – January 2019

Expense risks of entering litigation

  • Liability to pay firm of solicitors and barristers.
  • Liability to pay disbursements (experts, e-disclose and witness costs).
  • Liability to pay other party’s costs if claim unsuccessful.
  • Substantial cash flow and financial risk.

Solutions

After the Event Insurance (“ATE”)

  • Insurance against costs if case lost.
  • Can also include cover for your disbursements.
  • Premium can be deferred and contingent upon success i.e. not payable if lose. 
  • Need to show good prospect of success and good prospect of enforcement.

Third Party Funding

  • Funding for all costs in litigation, including your own solicitors’ fees and disbursements. 
  • Funder takes share of damages or multiple of outlay.
  • Need to show good prospect of success and good prospect of enforcement. 
  • Inappropriate if damages less than £300,000.

Conditional Fee Agreement (“CFA”) or Damages Based Agreement (“DBA”)

  • On a CFA the law firm charges at discount to hourly rate and receives percentage uplift on fees if claim successful.
  • Maximum uplift 100% and only hourly rate without uplift (“basic hourly rate”) recoverable from other party.
  • DBA is when solicitors are entitled to a percentage (up to 50%) of damages awarded, if successful.
  • Again good prospects of success required and only some law firms will offer. 

Points of Note

  • Options are not mutually exclusive.
  • Prevents litigation being a crisis purchase and enables you to significantly reduce and control cost risk.
  • It enables litigation to be assessed on a commercial basis.
  • Can also apply to arbitration and other dispute resolution procedures if criteria met.
  • Oury Clark open to discuss options on any proposed litigation. 
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